Dollar and jobs bite - Treasury

Treasury says talks it held with businesses and tax practitioners last month confirmed that non-commodity exports are being hurt by the high NZ dollar and companies are struggling to find staff.

Construction and finance companies reported strong growth, and the retail sector had solid sales, particularly over Christmas ... But companies were facing large cost increases, particularly for raw materials and labour.

The tightness of the labour market meant few companies were letting staff go, and wage increases tended to range from 3 per cent to 5 per cent, up from 3 per cent to 4 per cent in previous talks, Treasury said.