April’s labour market figures confirmed that the withdrawal of the JobKeeper wage subsidy wasn’t as big a shock as many had feared. The continued tightening of the labour market should eventually result in faster wage growth, with Western Australia set to lead the way. Meanwhile, the increase in fiscal stimulus in the New Zealand Budget this week supports our view that the economy is set to rebound faster than the RBNZ is anticipating. And the upward revision to the Treasury’s estimate of potential GDP are consistent with our view that the pandemic won’t result in major scarring.
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