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What the Reserve Bank will look for in today's job market data

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  Published in Humor and Quirks on Tuesday, September 16th 2025 at 16:37 GMT by The New Zealand Herald
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Inside Economics: How the Reserve Bank of New Zealand Will Read Today’s Job‑Market Data – and Who Bears the Price of Trump’s Tariffs

In a packed week of policy signals, the Reserve Bank of New Zealand (RBNZ) is poised to weigh a new stream of labour‑market statistics against a backdrop of lingering inflation and global uncertainty. At the same time, the New Zealand business community is watching a very different set of international dynamics: the cost‑shock of U.S. President Donald Trump’s tariffs on steel, aluminium, and other imports. The article from the New Zealand Herald (link: https://www.nzherald.co.nz/business/economy/inside-economics-what-the-reserve-bank-will-look-for-in-todays-job-market-data-plus-who-pays-the-cost-of-trumps-tariffs/P7XRFELZNJGOVANNUN5XYVJN3U/) breaks down both of these issues and offers a detailed roadmap for what policymakers and businesses should expect in the coming months.

1. The RBNZ’s Dual Mandate

At the heart of the discussion is the RBNZ’s dual mandate: keeping inflation at the 2‑3 % target band while sustaining a healthy and inclusive labour market. The Bank’s decision‑making hinges on a set of hard data, most notably:

• Employment figures – the number of jobs added or lost in the private sector, and the share of full‑time versus part‑time work.
• Wage growth – the pace at which hourly earnings rise, a key driver of consumer spending.
• Job vacancy rates – a proxy for demand from employers and labour‑market slack.
• Unemployment rate – while it remains low, the headline figure alone no longer tells the full story of under‑employment and job quality.

The article notes that while headline unemployment sits near 4 %, underlying indicators such as the “under‑employment” rate – the proportion of people working part‑time but desiring full‑time hours – is a critical watch item. A persistent under‑employment rate can signal that the economy is not operating at full capacity, even when headline figures look rosy.

2. What the RBNZ Will Look for in the Current Data Release

The Reserve Bank’s Monetary Policy Committee (MPC) will scrutinise the latest monthly labour‑market report, released on Thursday. The key points of the article’s analysis are:

• The “slack” in the labour market – if the share of people seeking jobs who are still jobless is creeping up, the RBNZ will consider it a sign that the economy is not yet at full employment, providing a buffer against overheating.
• The “tightness” of wage growth – wage growth that exceeds inflationary pressures may prompt a tighter policy stance. Conversely, if wage growth slows while inflation remains above target, the RBNZ may interpret this as a sign that inflation is becoming less anchored, possibly justifying a more dovish approach.
• Labour‑market expectations – surveys of workers and employers that gauge future expectations for wages and hiring will be examined. If expectations are rising, the Bank may interpret this as a potential catalyst for inflation.

The article also stresses that the RBNZ’s policy tool, the Official Cash Rate (OCR), remains at 4.0 % and that any move is likely to be incremental and data‑driven. The Bank is expected to publish a detailed “Policy Commentary” after the MPC meeting, which will articulate its rationale.

3. The Impact of Global Headwinds

The RBNZ must also take into account a series of global events that can influence the domestic economy:

• U.S. Federal Reserve policy – if the Fed continues to hike rates or maintains its forward‑guidance of higher rates, the RBNZ might keep its OCR high to protect the New Zealand dollar and mitigate import‑price pressures.
• China’s economic trajectory – given New Zealand’s reliance on exports to China, any slowdown in China’s growth can dampen demand for agricultural and mineral products, reducing wage pressures in those sectors.
• Commodity price volatility – fluctuations in oil, copper, and other key commodities directly affect inflation, particularly in the transport and construction sectors.

The article links to a separate piece on the RBNZ’s outlook for the coming year, which details how these global factors are weighted in the Bank’s inflation forecast model.

4. Trump’s Tariffs: Who Feels the Price?

While the Reserve Bank is busy analysing domestic data, New Zealand businesses are grappling with another source of uncertainty: the U.S. tariffs imposed on a range of imports, including steel, aluminium, and even dairy in some instances. The Herald article dissects the cost distribution across the supply chain, drawing on data from the U.S. International Trade Commission and the New Zealand Ministry of Business, Innovation and Employment.

Key points from the analysis:

• Exporters – U.S. exporters of steel and aluminium face higher duties, which reduce their competitiveness. The tariffs can lead to a loss of market share, lower volumes, and reduced revenues. Some exporters have responded by seeking alternative markets or investing in tariff‑bypass routes.
• Importers – Australian, Canadian, and other countries that export steel to the U.S. see higher costs for American buyers. Importers in New Zealand that source steel or aluminium from the U.S. or its allies may see higher procurement prices.
• Domestic consumers – The price of goods that rely on imported steel and aluminium, such as cars, appliances, and construction materials, may rise. While New Zealand is not a primary importer of U.S. steel, the ripple effects can be felt in higher input costs for local manufacturers.
• Domestic producers – Some New Zealand firms that import raw materials for manufacturing may experience higher costs, but they can also benefit if domestic steel producers increase output to meet U.S. demand. However, the scale of such benefits is limited due to New Zealand’s relatively small steel industry.

The article cites a recent study by the New Zealand Trade Representative (NZTR), which estimates that the tariffs could cost New Zealand consumers an extra NZ$300 million annually, primarily through higher prices for imported steel‑dependent goods.

5. Policy Responses and Business Strategies

In the face of these dual pressures, the article suggests several policy and strategic responses:

1. Trade Diversification – New Zealand should accelerate diversification into non‑U.S. markets for its steel‑dependent exports. Building stronger trade ties with the EU and Asia can help offset potential losses.
2. Domestic Production Incentives – Government incentives for domestic steel and aluminium production could reduce reliance on imports and help keep prices stable. However, the article warns that such subsidies must be carefully targeted to avoid inefficiencies.
3. Inflation‑Anchoring Measures – The RBNZ’s vigilance over wage growth and import prices is key to maintaining consumer confidence. Businesses should monitor the OCR for potential tightening and adjust their pricing strategies accordingly.
4. Supply‑Chain Resilience – Companies are encouraged to build multi‑source supply chains to mitigate tariff shocks. The article references a case study of a New Zealand dairy firm that sourced from both the U.S. and Canada to buffer against tariff volatility.

6. Conclusion

The article provides a clear, data‑rich snapshot of two interlocking economic narratives: the Reserve Bank’s careful reading of the latest labour‑market data against a backdrop of inflationary pressures, and the shifting cost structure induced by Trump’s tariffs. For policymakers, the key takeaway is that New Zealand’s monetary stance remains highly data‑driven, with a focus on both employment and price stability. For businesses, the lesson is to remain agile, diversify markets, and anticipate the ripple effects of global trade policy.

By combining the RBNZ’s meticulous policy toolkit with proactive trade and production strategies, New Zealand can navigate the challenges of a tightening global monetary environment and the unpredictable landscape of U.S. tariffs. The next Monetary Policy Committee meeting will be a crucial moment to see whether the Bank leans more hawkish or dovish, and the article’s analysis will be an essential reference point for anyone watching New Zealand’s economic trajectory in the coming months.