NZ Labour Market Data Set to Decide OCR Path

New Zealand's labour market statistics for June quarter are expected to show a rise in unemployment rate from 5.3%. The Reserve Bank of New Zealand (RBNZ) will be closely watching these figures before making its next move on mortgage rates.

The RBNZ's Monetary Policy Statement in May predicted an increase in the unemployment rate, and most major banks agree with this forecast. ASB is predicting a rate of 5.5%, while Westpac expects it to be slightly lower at 5.4%. Kiwibank stands out as an outlier, forecasting no change in the unemployment rate.

The labour market data suggests that labour supply is growing faster than demand, leading to higher unemployment and softer participation rather than job losses. Wage growth is expected to remain contained, with ASB predicting annual labour cost growth at 2% and ANZ Research forecasting a slowdown in wage growth to 1.9%.