Responses to the New Zealand employment data out earlier (link to data is here)

(Any bolding is mine)

Westpac:

  • Softer than expected data
  • Employment grew strongly over the quarter but this was matched by a big lift in labour supply so job participation rose to a new record high
  • Means that while jobs are growing strongly there's still plenty of spare capacity in the labour market - We saw that in the unemployment remaining steady and we saw it in surprisingly soft wage numbers
  • At the margin, it does add to the case for the Reserve Bank to cut rates. That's not our call at the moment but the data add to the case for that, and the Reserve Bank will looking at these numbers closely.

ANZ:

  • Consistent with the signal from some leading indicators, the pace of HLFS employment growth moderated fractionally in Q1, although it still painted a solid demand picture overall and suggests a solid start to GDP in 2015
  • However, the main news was again the significant growth in labour supply, with another solid gain in the working age population and record participation ensuring the unemployment rate remained unchanged (at an upwardly revised level)
  • This supply response is capping wage inflation - which surprised on the downside and is even showing signs of further moderation based on some measures - reinforcing that the labour market is at the heart of the current "solid growth but low inflation" conditions the economy is experiencing. It ensures the risks around OCR settings are skewed downwards

JP Morgan:

  • Strong migration flows back into New Zealand is pushing up the participation rate, which means employment growth is strong, the participation rate is strong and as a consequence the unemployment rate is treading water and not moving lower
  • But unemployment "at 5.8 percent ... is quite low by historical standards, so it is still a fairly reasonable outcome."

RBC:

  • Reasonable strong employment growth
  • But higher unemployment and weak wage growth
  • All these signs point to a fairly sedate inflation environment as it has been the case for several years
  • The RBNZ is very sensitive to wage data. This data sits pretty well with our view that the cash rate is moving lower. We are very comfortable it will happen some time this year. We see a cut in June and this supports our case