New Zealand Wages Grow at Slowest Pace in 10 Years, Exports May Recover
New Zealand Private Sector Wages for Q2 grew at the slowest pace since the end of 1999, a government report showed. Economists were taken by surprise after the release underscored their expectations by 0.2 percentage points. Wages for the period continue to add detail to an already clear image of a nation suffering from a sixth straight quarter of economic contraction. Labor data on Wednesday is expected to show that the unemployment rate in the same period jumped by 0.7 percentage points to 5.7%. The estimate, however, might come to be a bit too optimistic. Weaker-than-expected wage data may have come on the back of over-accelerating slashes to the payroll count among employers.
Despite the clearly pessimistic perspective that the poor labor market may generate, some good news may come of it. With wages growing at a slower-than-anticipated pace, there will be less upward pressure on inflation and hence give the Reserve Bank of New Zealand less incentive to continue halting their rate cutting campaign. In turn, the country's currency may begin to weaken after it surged nearly 21% in the six months through the end of July. As such, the affordability for New Zealand-made goods will rise to foreigners and may bolster the nation's export sector - despite what Bill English, the country's Finance Minister, said last week. Ultimately, labor market data this week may actually prove to be beneficial to the land of 4.2 million.