Q4 2021 Labour Market Data Review: Labour market set to tighten further in 2022

  • The unemployment rate ends 2021 at a record low, with employment above its maximum sustainable level. Wage growth was more moderate than expected
  • The labour market is biased to tighten further and wage pressures escalate over 2022 and we expect inflation to remain persistently high
  • We now expect the OCR to peak at 2.75% in early 2023, with both upside and downside risks to the interest rate outlook
The Q4 unemployment rate fell to 3.2%, a record low for the post-1986 quarterly history of the Household Labour Force Survey. The HLFS was bang on with ASB expectations and suggests that employment ended 2021 above its maximum sustainable level. We have changed our OCR call in light of the tight labour market and high medium-term inflation outlook. A steady pace of 25bp hikes is expected each meeting, with the OCR now peaking at 2.75% in early 2023. Risks to the OCR onlook are two-sided. On the downside, the tightening in financial conditions would hit the housing market, crimp domestic spending, and require more moderate OCR tightening. On the upside, inflation could prove to be more ingrained and capacity pressures more intense than is commonly assumed.



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Nick Tuffley

ASB Chief Economist

Since starting out in 1997 as an economist, it's fair to say Nick has seen a few hair-raising moments over the years, including the Asian Financial Crisis and the Global Financial Crisis.

One of Nick's strengths is his ability to communicate complex ideas in a readily understandable and entertaining way.  He thrives on helping people understand the economic environment to help enrich the quality of their business or personal life. He’s proud to lead a team that has won two Forecast Accuracy Awards from Consensus Economics, and has a strong track record with their Official Cash Rate and dairy price forecasts. 

Nick grew up in Christchurch and graduated with a Master of Commerce degree from the University of Canterbury.  He learned his economic ropes at the Reserve Bank of New Zealand before a long stint as a Senior Economist at Westpac, and joined ASB as Chief Economist in 2007.

Mark Smith

Senior Economist

Mark joined ASB in 2017, with over 20 years of public and private sector experience working as an economist in New Zealand and the UK.

His resume includes lengthy stints at ANZ and the Reserve Bank of New Zealand, and he has also worked at the Bank of England, HM Treasury and the New Zealand Transport Agency. Mark's areas of specialisation include interest rate strategy, macro-economic analysis and urban economics.

Born and bred in the Waikato, Mark studied at Waikato University where he graduated with a Master of Social Sciences, majoring in Economics.

Mark's key strengths are the ability to use his extensive experience, inquisitive nature, analytical ability, creativity and pragmatism to dig a little deeper and to deliver common sense solutions to tackle complex problems.

When not at work Mark likes to travel, keep fit and spend time with his friends and family.