Employment confidence increasing: Westpac

Workers' perceived job security rose by 5 percentage points in the March quarter. Photo: Ross Setford.

The country is more optimistic about the state of the labour market, according to a new Westpac report.

The Westpac McDermott Miller Employment Confidence Index rose to 108.5 in the March quarter - up from 106.5 in the December quarter.

However, the rise follows a sharp decline in confidence late last year, and still leaves confidence lower than it was in mid-2014.

The index summarises responses to five questions: households' perceptions of current and future job opportunities in New Zealand, their own actual and expected earnings, and expected changes in their own job security.

Employment confidence last year appeared to have been weighed down by concerns about the impact of drought and lingering softness in global demand, Westpac senior economist Satish Ranchhod said.

But while such factors resulted in headwinds for the economy, their impact didn't appear to have been as severe as initially feared.
In fact, much of this quarter's pick-up in employment confidence actually occurred in rural areas, he said.

"We're not surprised to see employment confidence picking up in early-2015," Ranchhod said.

"Indeed, conditions in the domestic economy are looking very positive.

"Growth in the year to December was the fastest we've seen in seven years, and over this period employment was up a strong 3.5 per cent.

"Indications for domestic demand going forward are also very favourable, with strong growth in the population, low interest rates, and favourable indications for construction activity."

The developments have prompted an increase in workers' perceived job security, which rose by 5 percentage points in the March quarter.

There was also a rise in the number of survey respondents whose earnings had increased, with the net percentage rising from 30 per cent to 31 per cent in March.

In addition, there was a pick-up in the proportion of households who expected their earnings to increase over the coming year - up to 33 per cent in March from 29 per cent.

Compared to last quarter, workers' optimism around finding a job and their expectations for job opportunities over the coming year were largely unchanged.

However, Ranchhod said he wouldn't be surprised to see the measures increasing over the coming year as the economy continued to grow at a robust pace.

Employment confidence rose in eight out of eleven regions, and was at similar levels in both rural and metropolitan areas. However, Canterbuty and Southland were noticeably more confident than others.

The regions with the lowest confidence were Northland and Gisborne/Hawke's Bay where unemployment remained elevated, and workers had concerns about the availability of jobs and earnings growth.

Read the full report here