The bias for the New Zealand dollar has been tilted to the upside. Experts suggest that NZD has benefited from the market’s improving risk outlook over global vaccine optimism over recent months and strong employement data. New Zealand’s unemployment rate dropped sharply to 4% in Q2, much better that the expected 4.5% and previous quarter's 4.7%.
The decline was better than the median estimate of 4.5%. The participation rate increased from 70.40% to 70.50%. In the same period, the labor cost index rose from 0.4% to 0.9% on a QoQ basis. The employment change increased by 1.0% after rising by 0.6% in the first quarter. The improved job market indicates that the New Zealand economy is bouncing back.
In comparison, the Australian dollar didn't change much after weak economic data from Australia. According to the statistics agency, the headline retail sales number declined by 1.8% in June after falling by 1.8% in the previous month. Further, sales rose by just 0.8% in the second quarter. On the other hand, the services sector showed some contraction in July as the country implemented more lockdowns.
With lockdown in Greater Sydney, the city's job market, in particular, continues to suffer. As per the data by Australian Bureau of Statistics, the number of people on the state’s payrolls tumbled 4.4% in the fortnight to July 17. Further there are now fewer people on NSW payrolls than in March last year before the first nationwide lockdown. While NSW experienced the biggest decline, payroll numbers fell in other states and territories– down 2.4% in the ACT, 1.9% in Victoria, 1.1 per cent in Queensland, 1.4% in South Australia, 1.2% in Western Australia, 1.75 in Tasmania and 1.5% in the Northern Territory.
Overall uncertainity looms over the organisations and workforce in both the nations as they continue to tackle the challenges of the pandemic and ensure safety of their people.