NZ employment confidence dwindles in 2Q as wage outlook deteriorates

Monday 29th June 2015

New Zealanders grew more downcast about the state of the labour market in the second quarter, with a softer outlook for wage growth weighing on confidence.

The Westpac McDermott Miller employment confidence index fell 5.7 points to 102.8 in the June quarter, the lowest level in two years. The present conditions index dropped 6.8 points to 96.1 and the employment expectations index declined 5 points to 107.3.

"The main concern that's weighing on workers' confidence levels is weakness in earnings growth," Westpac chief economist Dominick Stephens said in a statement. "Only a very low number of workers are expecting that their earnings will increase over the coming year."

New Zealand wages growth has been restrained by a surge in net migration, where new migrants and returning expats have expanded the size of the workforce, meaning employers haven't had to bid up pay. Government data in May showed the labour cost index rose 0.3 percent in the March quarter, the slowest pace since March 2014.

The Westpac McDermott Miller survey of 1,581 people found a net 20.6 percent reported earnings had gained from a year ago, down from 31.3 percent in the March survey, while expected earnings growth was a net 27.8 percent, down from 32.9 percent.

Respondents grew more pessimistic about job opportunities, with a net 28.5 percent saying it was hard to get jobs, compared to 25.5 percent in March, while a net 13.3 percent expecting it will be hard to get a job in a year's time, up from 9.1 percent in the first quarter.

Perceived job security also deteriorated, with a net 7.4 percent saying they had more security over the coming year, down from 13.3 percent in the March quarter.

Employment confidence fell in 10 of the 11 regions, with Bay of Plenty the only area to show improvement. Auckland showed the most confidence at 107.8, followed by Canterbury and Bay of Plenty at 106.3, Southland at 106.2 and Gisborne/Hawkes Bay at 101.3. Northland was the least confident at 90.2, followed by Wellington at 96.5 and Waikato at 96.9.

The survey was conducted between June 2 and June 13.

BusinessDesk.co.nz

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