While you’re gearing up for the rest of the major central bank events this week, why not take a shot at trading New Zealand’s jobs release coming up in a few hours?
Here are answers to common questions about the event:
What the heck is a jobs report?
Once every quarter Statistics New Zealand releases numbers that reflect the state of employment among New Zealand’s workers.
The release usually includes the net change of employment, the unemployment rate, labor participation rate (the number of employed workers vs. the number of able workers who are looking for jobs), and wage growth numbers.
The Reserve Bank of New Zealand (RBNZ) and other major market players closely monitor the employment report because having jobs is crucial to the capability of consumers to buy goods and services. That’s one of the factors that push consumer prices and GDP higher, yo!
What happened during the last release?
The employment sector was all sunshine and butterflies during the July to September quarter. See, the unemployment rate clocked in at 4.9%, lower than the downwardly revised 5.0% in Q2 2016 and marks the lowest rate since Q4 2008. Wowza!
But wait, there’s more! Here are other reasons why Q3 2016 was a good month for New Zealand’s workers:
- Employment picked up by 1.4% against Q3 2016 when analysts had only expected a 0.6% gain. Not only does this mark the fourth consecutive quarter of job growth, but it also outpaced the increase in working-age population (+0.07%).
- The labor participation rate climbed from 69.7% to 70.1%, implying stronger confidence in the labor market.
- The underutilization rate, or the percentage of workers not meeting their working needs, fell by 0.5% to 12.2%.
Annual wage inflation popped up by 0.4% with wages in both the private (+0.4%) and public (0.7%) sectors seeing increases.
Not surprisingly, Kiwi bulls partied at such a strong release. The Kiwi shot higher across the board and maintained its gains for most of the day.
How can I prepare for the event?
Fasten your seatbelts, because you only have a couple of hours to whip up your trading plans! Here are a couple of points that you should know before you trade the release:
Schedule of release – The report is slated to come out tomorrow at 10:45 pm GMT. Mark your calendars!
Market expectations – Analysts are betting that employment has gone up by 0.8% after growing by 1.4% in Q3 2016. The unemployment rate is also expected to improve, this time to 4.8% from last quarter’s 4.9% reading. Last but not the least, wage growth is expected to rise by 0.5%, up from Q3’s 0.4% uptick.
Pay attention to wage growth – Wage increases is one of the trending topics among market watchers, as some have expressed concern that immigrants are keeping wages low. A slowdown in wage hikes could inspire the RBNZ to step up its easing game and cut its interest rates to meet its inflation targets.
Chinese markets are still on holiday – Don’t be surprised to see limited reaction from the Kiwi even though the report has significantly deviated from market expectations. China is still on Spring Festival holiday, so volatility could be limited compared to the previous releases.
That’s it for my short trading guide today! Do you think we’ll see strong data from New Zealand this week?
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