The Kiwi dollar gained ground against the greenback yesterday following the release of overwhelmingly positive employment change data for the September quarter. The US ADP non-farm employment change and ISM services PMI data was also better-than-anticipated. However, the risk-on sentiment enabled the New Zealand dollar to cement its gains against the US dollar. Overall, in the last 24 hours, the NZD/USD pair rallied from a low of 0.7113 to 0.7180.
Data published by Statistics New Zealand indicated that the country’s employment rose by 2% q-o-q in the September quarter, following an increase of 1% in the prior quarter and more significant than the 0.40% rise anticipated by economists.
Correspondingly, the unemployment rate fell to 3.40% in the third quarter, from 4% in the earlier quarter, and bettered the 3.90% jobless rate anticipated by economists.
Specifically, the unemployment rate of men and women declined to 3.30% and 3.40%, from 3.80% and 4.20%, respectively.
The number of unemployed people declined to 98,000 in the September quarter, from 116,000 in the prior quarter. Also, the underutilization rate dipped to 9.20% in Q3 2021, from 10.50% in Q2 2021. In actual terms, the count of people who remained underutilized in the September 2021 quarter was 278,000, down 36,000 from the June quarter. The count of underemployed individuals decreased to 97,000 in September quarter, from 107,000 in the prior quarter.
Also, the employment rate increased to 68.80% in September, from 67.60% in the June quarter. Overall, in the September quarter, the count of employed people rose by 54,000 to 2,830,000.
Furthermore, the working-age population (WAP) increased 0.70% y-o-y to 4,113,000 in September, compared with a rise of 1.80% in the year ended September 2019.
According to the data published by Automatic Data Processing, the US non-farm payrolls increased 571,000 in October, after rising by 523,000 in the earlier month and surprised economists who were anticipating only an addition of 400,000 jobs for the reported period.
Small and medium businesses added 115,000 and 114,000 jobs, respectively. Large businesses added 342,000 jobs.
In terms of sector, goods-producing industries added 113,000 industries. In particular, the construction and manufacturing industries added 54,000 and 53,000 jobs, respectively. Service-providing industries added 458,000 industries. Specifically, the leisure/hospitality industries added 185,000 jobs. While professional/business services added 88,000 jobs, the trade/transportation and utility industries sub-sector created 78,000 jobs.
Commenting on the data, Nela Richardson, chief economist, ADP, said, “The labor market showed renewed momentum last month, with a jump from the third quarter average of 385,000 monthly jobs added, marking nearly 5 million job gains this year.”
According to IHS Markit, final services PMI (purchasing managers’ index) increased to 58.70 in October, from 54.90 in September, and a few notches higher than the flash estimate of 58.20. Economists did not anticipate any change in the flash estimate. The recent expansion was the fastest since July.
October data reflected a robust increase in fresh orders at service providers, with the growth rate hitting a three-month high. On the other hand, fresh business from overseas declined for the third month in a row at the beginning of the fourth quarter. Demand was supposedly affected by pandemic unpredictability in major export markets.
In accordance with higher fresh order inflows and rising pressure on capacity, companies recorded an unanticipated increase in backlogs of work in October. Overall, the IHS Markit composite PMI output index recorded 57.60 in October, an increase from 55 in September to reflect the quickest growth in private sector output since July.
Data published by the Institute for Supply Management indicates that services PMI (purchasing managers’ index) rose to a record high level of 66.70 in October, from 61.90 in the earlier month. Economists did not anticipate any change in the September figure. The earlier high of 64.10 was recorded in July.
While the business activity index rose by 7.50 m-o-m to 69.80, the new orders index recorded a rise of 6.20 to 69.70. Likewise, the supplier deliveries index grew by 6.9 percentage points to 75.70.
The robust economic data from both the US and New Zealand is expected to keep the NZD/USD pair range-bound with a slight bullish bias in the short term.
The historical price chart indicates that the NZD/USD pair is rising after testing the support at 0.7105. The next major resistance is anticipated only near 0.7220. Additionally, the currency pair is trading above its 50-day moving average, while the MACD indicator is in the positive region. Therefore, we are anticipating the currency pair to rally further in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
