Michael Gordon, senior economist at Westpac, points out that New Zealand’s labour market has defied expectations of a slowdown, with the unemployment rate falling to an 11-year low of 3.9% in the June quarter.

“Employment growth was solid, with the surprise being the lack of an accompanying rise in labour force participation. Wage growth was boosted by this year’s large increase in the minimum wage, but underlying growth looks to have picked up a little as well. Today’s results won’t stand in the way of an OCR cut tomorrow, though they reduce the risk of a follow-up move in September.”