Except for the graph of underemployment? And the fact that the same conclusion (spare capacity but a more rapid recovery) holds for that stat to.

Excellent points.

I’d that note I’d say that 6.0% still implies we have a lot of spare capacity – implying that there is still an “output gap” that stimulatory interest rates can help out with. Of course, this gap is now a lot smaller than we expected.

Interestingly, the RBNZ did expect the UR to fall quickly when it started falling, and may just see this as moving the shift forward – as a result this release might actually have very little direct impact on how far they think they have to move rates.

1. The September to December rise was indeed overstated – with the number of unemployed rising virtually in a straight line, the seasonal adjustment program had trouble distinguishing any seasonal variation, and therefore treated it all as ‘genuine’. Once the trend turned, there was some variation and the program was able to treat more of the rise as seasonal. That’s why December was revised from 7.3% to 7.1%.

2. March quarter won’t suffer from the same problem, since the trend has already turned. I’ve done a barrage of tests on the seasonal factors, and the 6.0% looks to be genuine. The 7.3% was not – as we now know – and with time it may even be revised below 7%.