KEY POINTS:
Salary and wage rates grew at a record 3.6 per cent in the year to the September quarter, figures published today by Statistics New Zealand (SNZ) show.
The annual increase in the labour cost index (LCI) was the largest since the series began in the December 1992 quarter.
Results of the quarterly employment survey (QES) for the September quarter, also published today, showed the annual increase in total gross earnings continued to exceed the annual increase in total paid hours.
That resulted in a 5.5 per cent increase in average total hourly earnings, to $24.37.
The QES average earnings statistics reflected not only changes in pay rates, but also compositional and other changes across and within the paid workforce.
In comparison, the LCI measures changes in salary and wage rates for a fixed quantity and quality of labour input.
The QES results showed that while annual earnings growth remained strong, the growth in demand for labour slowed, SNZ said.
Total gross earnings increased 7 per cent for the September year.
Employment as measured by full-time equivalent employees (FTEs) increased 1.6 per cent for the year to September 2008, the smallest annual increase in FTEs since March 2007.
The LCI increase in salary and wage rates, including overtime, for the September 2008 quarter was 1.1 per cent, match ing the record of the December 2007 quarter.
For all surveyed salary and ordinary time wage rates that rose in the year to the September 2008 quarter, the mean increase was 6.1 per cent, the largest annual mean increase since the series began.
RBC Capital Markets senior economist Su-Lin Ong said the third quarter was probably the peak for both labour costs and inflation.
With the country clearly in recession, today's figures would not stop the Reserve Bank cutting interest rates further.
The LCI put the increase in private sector salary and wage rates at 3.7 per cent for the year to September, the largest annual increase recorded for the private sector since the series started.
In the September quarter the private sector increase was 1.1 per cent.
Public sector salary and wage rates were up 3.6 per cent annually, the LCI showed, and 1.1 per cent in the quarter.
Health and community services had the largest annual increase in salary and wage rates at 5.7 per cent, followed by local government administration at 5.4 per cent.
Deutsche Bank chief economist Darren Gibbs said gross wage growth still looked pretty solid, but things were going to be much weaker next year.
"Wage numbers were pretty high, but that tells us more about where the labour market was 12 to 18 months ago, it doesn't really tell us where we're going."
- NZPA