NZ employment confidence picks up; consumers less glum

Wednesday 1st October 2008

New Zealand employment confidence rose from a record low in the September quarter, adding to signs the economy may have lifted off the bottom since June amid interest rate cuts and the prospect of lower taxes.

The Westpac McDermott Miller employment confidence index rose 0.4 points to 121.2 in the latest three months, after reaching 120.8, the lowest reading in its four-year history, in the June quarter.

The survey of workers comes after figures showed consumer confidence rebounded in the September quarter as optimism increased about the outlook for the economy and costs of fuel and borrowing fell. Still, the latest survey was taken before the latest turbulence on Wall Street.

"The June quarter was the nadir for economic growth," said Dominick Stephens, Westpac research economist. "It's clear the New Zealand economy in the September quarter from the consumer side of things was stronger than the June quarter."

Helping lift the mood, petrol prices have declined, interest rates are beginning to fall and the drought is finished, he said. Westpac expects the economy contracted 0.1% in the third quarter, after shrinking 0.2% in the second.

Most economics expect the central bank will cut the official cash rate 50 basis points this month to 7% and follow up with two 25 basis point cuts at its next two reviews.

The employment survey showed some weakening. A net 24.9% of respondents said jobs were easy to come by now, down from a net 33.1 percent three months earlier. Job security fell to a net 12.2% from a net 14.7%.

By Jonathan Underhill

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