ING’s Francesco Pesole notes that New Zealand’s labour market and growth backdrop look broadly consistent with the Reserve Bank of New Zealand’s projections. Stronger-than-expected employment growth, high participation, and improving PMI data suggest underlying momentum remains firm, while GDP is seen close to the RBNZ’s 0.7% QoQ estimate and 2026 growth forecasts near 2.9% are unlikely to be significantly revised.

Labour market tightness supports policy stance

"The jobs market is also sending relatively hawkish signals. The unemployment rate was 5.4%, slightly above the RBNZ’s 5.3% estimate for 4Q25 – but the entire surprise came from a jump in the participation rate. Underlying momentum looked stronger: 4Q employment growth was 0.5% QoQ versus the RBNZ’s 0.2% forecast, and sharper‑than‑expected declines in net migration could prompt some labour market tightening in 2026."

"Indicators from SEEK (New Zealand’s largest employment marketplace) show that applications per job ad have remained significantly elevated post‑Covid, while new job ads have been much lower. However, some improvement emerged in 2H25, with these trends gradually starting to reverse."

"On the growth side, we do not expect 4Q GDP to deviate much from the RBNZ’s 0.7% QoQ estimate. Forecasts for 2.9% growth in 2026 may not be materially revised at this meeting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)