Australia hikes into resilient spending while New Zealand's job market cools

New Zealand cools

New Zealand's unemployment rate rose to 5.7 percent in the September 2026 quarter, up from 5.6 percent, its highest level since September 2015, according to Westpac's labour-market review. Employment fell 0.1 percent in the quarter, and the participation rate fell alongside it. m:…1044

ANZ's review adds depth to the softness: employment fell 0.1 percent quarter on quarter, the participation rate fell 0.2 percentage points to 70.4 percent, and the underutilisation rate remained at a 12-year high of 13.8 percent. Real wages declined over the past year, with average hourly earnings up 2.9 percent against consumer-price inflation of 3.7 percent. m:…5245

The surveys behind the headline do not fully agree: the employer-focused Quarterly Employment Survey suggested a modest rise in employment and the Monthly Employment Indicator pointed to a small rise in jobs, while Westpac notes that June quarter employment increases were likely due to sampling error rather than a genuine surge. Private sector wage growth was 2.1 percent year on year, and 54 percent of firms cited cost-of-living adjustments as the reason for lifting wages, up from 40 percent a year ago. m:…1044 m:…5245

Westpac notes that current job growth is not fast enough to absorb population growth and that wage growth remains muted because workers lack leverage. The September quarter results were weaker than the Reserve Bank of New Zealand expected, and the market reduced the odds of a December official-cash-rate hike from 80 percent to around 50 percent after the data. m:…1044 m:…5245

Australia tightens

Australia moved the other way: the Reserve Bank of Australia raised its cash rate to 4.85 percent in a 6-3 split vote, according to Westpac's morning report, although Governor Michele Bullock's subsequent comments were described as dovish and markets reduced expectations for near-term tightening. m:…0543

The spending data helps explain why the Reserve Bank could hike at all: Australian household spending rose 0.6 percent in September 2026, returning to growth after a decline in August, with real spending up 0.7 percent and nominal spending up 2.1 percent in the third quarter. m:…7478

The composition of that spending was steady rather than exuberant: non-discretionary spending outperformed discretionary categories, services spending rebounded, transport led real spending growth, and all states except Tasmania recorded positive volume growth in the quarter. Real annual household spending grew 3.2 percent in the third quarter. m:…7478

The divergence, and its limits

The contrast is sharp but not absolute. ANZ still forecasts 25-basis-point hikes at each of the next three Reserve Bank of New Zealand meetings, even after the weak labour data, which suggests its economists read the softness as a pause in tightening rather than a turn to easing. m:…5245

Westpac's New Zealand review also contains a brighter signal for growth: hours paid rose 0.6 percent quarter on quarter in the Quarterly Employment Survey, providing a signal for improved quarterly GDP growth, even as the household survey showed employment falling. m:…5245

For readers watching both economies, the near-term question is which data series wins: Australia's resilient consumer and a split-vote hike, or New Zealand's cooling labour market and a market that has halved the odds of a December move. The next labour and spending releases will show whether the Tasman gap widens or closes. m:…0543 m:…5245