KEY POINTS:
Wage inflation remained high in the September quarter, and while the figures might not give the Reserve Bank any fresh cause for concern, there was little to mollify it either.
The bank's preferred indicator of wage inflation - the labour cost index's measure of private sector wages including
overtime - rose 0.9 per cent in the quarter and 3 per cent for the year. Those are both record increases since this statistical series began in 1992.
The index filters out elements of wage growth that reflect higher productivity, such as bonuses and promotions.
The unadjusted figure, which is a better reflection of what is happening to take-home pay and payroll costs, rose 1.4 per cent for the quarter and 5.1 per cent for the year.
That the annual rate growth in the raw number had fallen from 5.5 per cent three months ago and 5.7 per cent six months ago might give the Reserve Bank some comfort that wage growth had turned the corner, said Westpac economist Donna Purdue.
"Overall, indications are that wage pressures have yet to ease substantially, which will see the Reserve Bank maintaining a watchful eye on the labour market."
Statistics New Zealand said 23 per cent of wage rates rose between 3 and 5 per cent (compared with a year earlier) and another 20 per cent rose more than 5 per cent. The median increase was 4.1 per cent.
While those figures are high by historical standards they are a touch lower than in the June quarter.
Deutsche Bank chief economist Darren Gibbs said the reported levels of skill shortages from the Institute of Economic Research's quarterly surveys of business opinion suggested wage inflation should begin to ease gradually next year.
"The extent to which wage growth eases will depend on how successful employers are in rejecting employees' requests of full compensation of the high rate of headline inflation that has prevailed over the past 12 months."
But the president of the Council of Trade Unions, Ross Wilson, said unions wanted to see real wages rise each year in order to start reducing the 30 per cent gap between wages here and in Australia.
Meanwhile, another set of data, the quarterly employment survey, found that employees' wage and salary incomes - the largest component of household spending power - grew 8 per cent in the year ended September.
That was the combined effect of more jobs, slightly longer hours worked per week, and higher hourly wages.
ANZ National Bank chief economist Cameron Bagrie said the stage looked set for a consumer spend-up heading into the end of the year, with gross earnings up 8 per cent from a year ago, recent declines in petrol prices adding to disposable incomes, recent rises in the kiwi dollar set to lower prices of imported goods, and consumer confidence on the rise.
But the Reserve Bank is counting on consumer spending almost flatlining in real terms through 2007 and 2008.
The financial markets are now pricing a better than 50:50 chance that Governor Alan Bollard will raise the official cash rate on December 6.
One of the key pieces of information he will get between now and then is the jobs data in Thursday's household labour force survey.
Westpac and ANZ economists expect it to record no growth in employment during the September quarter, partly as statistical "payback" for the June quarter's remarkably strong 1 per cent growth.