New Zealand wage inflation accelerated for private sector workers and slowed for public servants in the fourth quarter, leaving overall labour costs benign enough to ensure the central bank keeps interest rates low.
The labour cost index rose 0.6 per cent in the three months ended December 31, beating the 0.5 per cent forecast by a Reuters survey of economists, with private sector wage inflation at a quarterly pace of 0.7 per cent and public sector at 0.4 per cent, according to Statistics New Zealand.
The bulk of the public sector's gain came in local government, with a 1 per cent expansion in the quarter, outpacing the 0.4 per cent growth in central government salary and wage rates.
Private sector wage inflation grew 2 per cent in the 2011 calendar year, faster than the 1.8 per cent expansion in the public sector. Across both sectors, the annual pace was 2 per cent.
Total private sector average hourly wages were flat at $24.58, while overtime rates shrank 1.8 per cent in the quarter, according to the Quarterly Employment Survey, also released today. Total public sector wages rose 0.8 per cent to $33.86 an hour, even as overtime sank 6.3 per cent.
The tepid pace of wage inflation means Reserve Bank Governor Alan Bollard doesn't have pay negotiations hanging over his head when he next reviews monetary policy in March. With consumer prices remaining relatively static, he will be able to keep the benchmark interest rate at a record 2.5 per cent for longer.
Last month, Bollard signalled increased bank funding costs will lift interest rates independent from the OCR, and the eventual Canterbury rebuild next year will create a construction boom that will introduce inflationary pressures.
Today'ss data comes before Thursday's release of the Household Labour Force Survey, which is expected to show unemployment fell 0.1 percentage points to 6.5 per cent.
Total filled jobs rose a seasonally adjusted 0.5 per cent to 1.7 million, beating the 0.2 per cent growth forecast by a Reuters survey, with 0.6 per cent expansion in full-time equivalent positions (FTEs) to 1.34 million.
Rental, hiring and real estate services showed the biggest quarterly growth, up almost 11 per cent to 22,800, followed by accommodation and food services to 72,100, and a 4.8 per cent gain in electricity, gas, water and waste services FTEs to 11,000.
Information, media and telecommunications reported the biggest quarterly loss of 3.8 per cent to 28,200, and have shed 5.4 per cent of its FTEs this year.
Total weekly paid hours rose a seasonally adjusted 0.6 per cent in the three-month period to 51.2 million, broadly in line with expectations.