New Zealand Labour Cost Index

The Labour Cost Index, or LCI, is New Zealand’s main official measure of changes in salary and wage rates after controlling for changes in job mix and the quality or quantity of work. Stats NZ collects pay-rate information from employers for a fixed set of job descriptions and publishes the index quarterly. Economic calendars commonly report the release as quarter-over-quarter and year-over-year percentage changes, which describe the same underlying indicator over different comparison periods.

Wage growth can feed into domestic inflation, household spending and business cost pressures. Because the Reserve Bank of New Zealand monitors labour costs when assessing inflation persistence, LCI surprises can influence expectations for the Official Cash Rate and NZD-denominated interest rates.

NZD FX

A surprise in wage inflation can affect the New Zealand dollar through changes in rate expectations and domestic inflation sentiment.

New Zealand government bonds

LCI data can move short- and medium-term yields when it changes expectations for Reserve Bank of New Zealand policy.

Interest-rate swaps

Swap pricing may react if the release shifts expectations for the timing or scale of future policy-rate changes.

Moderate. Market reaction is usually strongest when the release materially changes RBNZ policy expectations or arrives alongside other labour-market data.

• Distinguish the QoQ and YoY rates: the quarterly figure is timelier, while the annual figure smooths short-term noise.
• Compare the LCI with employment, unemployment, participation and average earnings data released around the same labour-market cycle.
• Watch revisions and methodological notes, especially when comparing the LCI with other wage measures.
• Remember that the LCI controls for job mix and quality changes, so it may not match changes in average pay received by households.

Educational guidance only — never a trading signal or recommendation.