Commenting on the latest unemployment data from Statistics New Zealand, Mr Toplis said the labour market appeared strong at first glance.
The 1.2% bounce back in employment was little more than a correction for March's surprisingly low result and did not suggest a tightening in labour conditions.
"In contrast, the jump in the unemployment rate to 3.9% is confirmation that not only is the low in the unemployment rate behind us but that it's got a long way to go yet before it peaks."
The BNZ's 5% unemployment rate forecast was broadly in line with the Reserve Bank's view of the world and yesterday's data was consistent with the central bank's latest published forecasts, he said.
At the margin, employment was slightly higher but so too was unemployment.
There was nothing to jar the Reserve Bank's view of the future.
That was important given market pricing going into the release, Mr Toplis said.
"The market appears hellbent on trying to price in an 0.5% official cash rate cut by the Reserve Bank at its September monetary policy statement.
We thought this overdone and today's data has reinforced this perception.
"In fact, we would go so far as to say that there is a greater chance of the Reserve Bank not going in September than there is of it going 0.5%."
Mr Toplis urged caution about the strength of the employment data for the June quarter, saying it was consistent with a second-quarter GDP result stronger than the -0.2% he had earlier forecast.
While the BNZ would not be changing its forecast, it was a reminder that it would not take much to get rid of the technical recession being predicted.
The Statistics NZ data provided some interesting insights as to the hits the economy was taking.
The stand-out was construction, which had shed almost 10,000 jobs in the year to June 2008, reflecting the sharp downturn already evident in the housing sector.
"One might expect more of the same over the next few quarters.
One can't help but think that the 3500 drop in finance-sector jobs is also related."
Accommodation, restaurants and cafes dropped 4000 jobs as discretionary income took a hit.
While there would be industries that were sheltered from the current downturn, such as agriculture and some service providers, Mr Toplis suspected that weakness in employment would prove relatively widespread as the year wore on.
"We are not expecting mass redundancies but we do envisage an increasing number of companies reducing staff numbers via natural attrition."
