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NZ labour costs rise 0.5% in 3Q, paced by Canterbury construction sector

Tuesday 6th November 2012

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New Zealand's wage inflation was paced by the construction sector in Canterbury as the rebuild of the country's second-biggest city continues to pick up pace.

Private sector salary and ordinary time wages rose 0.5 percent in the three months ended Sept. 30, unchanged from the June quarter, according to Statistics New Zealand's labour cost index. That was in line with economists' expectations in a Reuters survey. Public sector wage inflation was 0.4 percent in the quarter.

The national pace was outstripped by a 0.7 percent increase in labour costs for Canterbury's construction sector, which has started showing signs of gathering pace in recent months.

Last month, contract labour firm AWF Group said demand for its services as the country's biggest provider of temporary staff indicated the Canterbury recovery was gaining momentum, with firms usually willing to take on casual staff before committing to permanent employees.

Today's figures precede Thursday's household labour force survey, which is forecast to show a small fall in the unemployment rate to 6.7 percent and a 0.3 percent pick-up in jobs growth.

New Zealand's labour market has been slow to recover from the nation's deepest recession in two decades, with employers more willing to take on part-time staff than stack their books with full-timers.

Last month, the New Zealand Institute of Economic Research's quarterly survey of business opinion showed labour conditions softened in the quarter.

Statistics New Zealand's quarterly employment survey, also released today, showed total filled jobs rose 0.3 percent to a seasonally adjusted 1.715 million, pipping the 0.2 percent growth expected by economists. That was bolstered by a pick-up in part-time workers, with a 0.1 percent decline in full-time equivalents to 1.35 million.

Manufacturing FTEs shrank 4 percent to an actual 165,600 while professional, scientific, technical, administrative and support services declined 4.7 percent to 176,600. Manufacturing typically experiences a fall in FTEs in the September quarter.

Local manufacturer Rakon, which makes components for smart phones and navigation devices, today announced plans to lay-off up to 60 workers at its New Zealand facility and shift that work to its Chinese and Indian factories as it looks to cut costs and fatten its tight margins.

Today's figures showed total paid hours shrank 0.3 percent to a seasonally adjusted 51.8 million in the quarter, missing the 0.1 percent increase predicted.

Private sector wages climbed 1.4 percent to $26.26 an hour, up from 0.2 percent growth in the June quarter and ahead of the 1.1 percent forecast.

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