No shortage of jobs but wages are struggling to keep up, employment survey says.
No shortage of jobs but wages are struggling to keep up, employment survey says.
New Zealand households remain positive about the labour market, despite the number of headwinds for the wider economy, says Westpac chief economist Michael Gordon.
The latest Westpac McDermott Miller Employment Confidence Index rose by a further 6.6 points in March, reaching its highest level since June 2019.
"The employment resultsare in marked contrast with the gloom that pervaded the consumer confidence survey," he noted.
That survey, released this week, showed confidence dipping to the lowest level since the GFC in 2008.
"There's no contradiction here, though," Gordon said.
"New Zealanders are upbeat about job prospects and are seeing some growth in their incomes, but the rapidly rising cost of living has left many feeling like they're going backwards."
But the tight job market is likely to put more upward pressure on wages in the months ahead.
The survey results suggested that the unemployment rate, already at a record low of 3.2 per cent, could go even lower in the near term, Gordon said.
It showed a lift in "past and expected earnings growth" in the March quarter, an element of the labour market that has struggled to gain much traction to date.
"Even so, the earnings measures remain below their pre-pandemic levels, at a time when living costs have ballooned, putting pressure on households' budgets."
Much of the strength in employment confidence continued to be in perceived job opportunities, and the evidence here was "undeniable", Gordon said.
"Employers have been desperately seeking workers for the last year or so, and even with the effects of the Omicron variant looming large, job advertisements rose to a new record high in February."
Much of the rise in inflation to date had been due to cost shocks, as Covid has disrupted global supply chains while shifting demand towards areas where capacity is stretched, Gordon noted.
"There are no winners when New Zealand is hit by these kinds of global shocks; the only question is how the pain will be shared, and even in an extremely tight jobs market, we wouldn't expect workers to be completely shielded from this."
The survey also showed how people's ability to protect themselves against inflation varied greatly.
For the young and those on low incomes, the lift in employment confidence was largely around job opportunities.
Whereas it was among the older and those on higher incomes that there was more evidence of a pickup in earnings growth.
Employment confidence was mixed across the country, with the upper and lower parts of the country tending to fare better than the middle.
As with consumer confidence, the Southland region was the standout for the March quarter, scoring particularly high on earnings and job security, Gordon said.
Southland's economy has been less affected by Covid disruptions and is benefiting from strong export commodity prices.
Michael Gordon, Westpac chief economist. Photo / Supplied
The Westpac-McDermott Miller Employment Confidence 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.
The survey took place over the period March 1-17, 2022. The sample size was 1559.
