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Today's stunning drop in the unemployment rate must have all but sealed the deal for a June interest rate hike by the Reserve Bank says NZI Business presenter Corin Dann.
The decline from a revised 7.1% to 6% was the largest fall since the survey began in 1986 and while the unemployment data can be volatile, it is a clear sign that there is a genuine recovery underway in the New Zealand economy.
And, one that crucially is capable of coping without record low interest rates.
That was also the message Alan Bollard gave in a speech today just prior to the jobs data being released.
In it, he stressed New Zealand's recovery was in a less fragile stage and that he was comfortable with what the market was forecasting for interest rate hikes.
Markets are pricing a June or July hike, although given the jobs numbers most participants will definitely now have their money on a June hike. The likelihood of a September hike seems all but gone.
That means Kiwis on floating rates need to prepare for a hit in the pocket in coming weeks, although Bollard did stress today that he won't be making big hikes in the rate - suggesting 25 basis points is likely in June.
Putting all that aside, it is great to see the New Zealand economy creating a substantial amount of jobs again and this has to be a great confidence boost.
While interest rate hikes are a pain, they are also a sign that we are finally getting the economy back into a normal recovery mode after what has been a tough few years.
One caveat though: Dr Bollard did warn there would be more surprises to come in the recovery, and given the turmoil in markets because of the Greek crisis, one would have to agree.
Read more articles by NZI Business presenter Corin Dann .
