Employment Whiplash

	The June quarter Household Labour Force Survey delivered a very surprising lift in the unemployment rate, up to 6.8% from 6.0%. The exceptional degree of volatility in the unemployment rate has made interpreting the trend in unemployment extremely difficult over the past year.
	The weaker labour market and waning support for dairy prices adds another blow to the growth outlook – and a reassessment of inflation pressures – and as a result we are expecting the RBNZ will increase the OCR at a more gradual pace
	We have changed our OCR view, and now explicitly expect the RBNZ to pause in both October and December, with OCR increases resuming in January. In addition, we now expect a 4.5% OCR peak in 2011, down from 5%.

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Other sites of interest: www.asbsecurities.co.nz  www.asb.co.nz  www.commbank.com.au

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Report prepared by:
Jane Turner
ASB Economist
Phone: +64 9 374 8185
Fax: +64 9 302 0992