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New Zealand jobless falls to lowest since 2008; kiwi jumps
[WELLINGTON] New Zealand unemployment fell to an eight-year low in the third quarter as the economy boomed, fuelling bets that the central bank may be nearing the end of its easing cycle. The currency rose.
The jobless rate fell to 4.9 per cent from a revised 5 per cent three months earlier, Statistics New Zealand said in Wellington Wednesday. That's the lowest since the fourth quarter of 2008 and compares with the median analyst forecast of 5.1 per cent in a Bloomberg survey.
Employment increased 1.4 per cent from the second quarter, almost three times the 0.5 per cent gain economists expected.
A tightening New Zealand labour market could help Reserve Bank Governor Graeme Wheeler to lift inflation back to the middle of his one to three per cent target band. Still, employers are able to fill positions without big wage increases because of record numbers of immigrants seeking work.
"For the Reserve Bank, today's labour market data is likely to have been a little stronger than expected," said Anne Boniface, senior economist at Westpac Banking Corp in Auckland.
"However, there will be lingering concerns about the lack of wage growth and the impact of this on the inflation outlook."
The New Zealand dollar jumped on the data. It bought 72.17 US cents at 11:18am in Wellington from about 71.85 US cents before the report.
Employment growth slowed from 2.4 per cent in the second quarter, when a new survey methodology was introduced that represented a break in the series. Statistics New Zealand today reiterated that caution should be used when interpreting changes from previous years.
The RBNZ has cut interest rates to a record low in an attempt to boost inflation, which has been below one per cent for two years and was 0.2 per cent in the third quarter. Mr Wheeler is expected to lower the official cash rate to 1.75 per cent on Nov 10, according to all 17 economists surveyed by Bloomberg. Investors now see only a 20 per cent chance of Mr Wheeler cutting rates again next year, down from 36 per cent a month ago.
The central bank in August estimated the jobless rate would fall to 4.8 per cent by the first quarter of 2017 and 4.4 per cent a year later.
Assistant Governor John McDermott last month said strong net immigration and increased labour market participation had boosted the supply potential of the economy, meaning that New Zealand has been able to grow at a robust pace without generating significant inflation.
The economy expanded 3.6 per cent in the year through June, among the fastest rates of growth in the developed world.