Wages have been rising and people expect a bit more in their back pocket as low unemployment keeps New Zealanders upbeat about the jobs market.
Employment confidence across the country rose to its highest level since June 2019, with the Westpac McDermott Miller employment confidence index rising 6.6 points in the March quarter to 113.5, the highest reading the survey has recorded since the covid-19 pandemic all but closed the economy to the outside world.
The survey of 1,559 people showed a net 15.7% of respondents received a pay rise in the quarter, up from a net 8.5% in the December period, and more people anticipate a fillip to their pay packet with a net 23.1% expecting a pay rise in the coming year, up from a net 18.7% in the prior period.
Westpac acting chief economist Michael Gordon said the survey results were in “marked contrast” to the “gloom” that prevailed in a consumer confidence survey published on Tuesday.
“New Zealanders are upbeat about job prospects and are seeing some growth in their incomes,” he said.
The wages outlook comes as rising costs eat into people’s disposable income, with consumer price inflation tracking at its fastest pace in more than 30 years.
Westpac’s Gordon said wage growth remained below pre-pandemic levels due to prices rising so rapidly, which left people feeling like they were going backwards.
Accelerating inflation
Ballooning living costs put increased pressure on household budgets and accelerating inflation was a concern for employees in the near future.
“Even in an extremely tight jobs market, we wouldn’t expect workers to be completely shielded from this,” Gordon said.
The survey showed respondents' current confidence in the job market improved, with a jump of 10.7 percentage points and a net 20.4% expecting more job opportunities in the coming year. Gordon said this was a “good lead indicator” of the rate of unemployment.
He said the unemployment rate, which fell to 3.2% in the December quarter, could go even lower in the near term.
Gordon said employment confidence was “mixed” across the country, with the upper and lower parts of the country tending to fare better than the middle.
Southland stood out in the March quarter – as it also had in the consumer confidence survey on Tuesday – scoring particularly high on earnings expectations and job security.
Gordon said Southland’s economy was less affected by covid-19 disruptions and benefited from strong export commodity prices.
Imogen Rendall, market research director at McDermott Miller, said employment confidence in the public sector rose “considerably” in the March quarter, up 12.9 points to 128.1.
But private-sector employees saw a much smaller rise in confidence with an increase of just 4 points to 106.
“Private sector employees remain concerned about their personal job security over the coming year as well as future job opportunities, while public sector employees are buoyant with a very positive view of both their current employment conditions and their expectations for the future,” Rendall said.
