NZ employment confidence edges up to six-year high in third quarter

Monday 6th October 2014

New Zealand employment confidence rose to a six-year high in the September quarter as sentiment in Canterbury bolstered the nation's outlook on jobs, according to the latest Westpac McDermott Miller Employment Confidence Index survey.

The index rose to 111.5 in the September quarter from 109.9 in the June quarter, in a measure were a number above 100 indicates optimists outweigh pessimists. The index has risen for seven consecutive quarters and is now at its highest level since September 2008, when the global financial crisis began to weigh on sentiment. It remains below its peak of 135.9 in September 2007.

New Zealand's unemployment rate fell to a five-year low 5.6 percent in the June quarter as employment growth in Canterbury fuelled the labour market. Meanwhile, businesses intended to hire more staff according to ANZ Bank's latest business outlook survey for September, with a net 21.3 percent of businesses intending to employ more people, from August's 18 percent.

Business and consumer confidence measures have fallen in recent months on concerns the pace of economic growth is slowing, as falling dairy and log prices, the country's largest and third largest exports respectively, and the historic strength of the New Zealand dollar weighs on export receipts.

"The rise in employment confidence might seem to go against the recent run of play, with business and consumer confidence surveys falling over the September quarter," said Michael Gordon, Westpac senior economist. "However, we don't see these messages as contradictory. The labour market typically lags the broader economic cycle, and it is only in the last year or so that we've seen a marked lift in employment growth."

Employment confidence rose in eight out of 11 regions, and Canterbury returned to the position of most confident region after being overtaken last quarter by Auckland. The area is in the middle of a construction boom as New Zealand's second largest city is rebuilt after being destroyed by earthquakes in 2010 and 2011. Canterbury recorded a "particularly strong lift in perceptions of wage increases and job security," Gordon said.

The September quarter saw gains across all five measures. Household perceptions of the ease of getting a job rose to a net minus 25.6 percent from minus 26.5 percent, the least negative reading since December 2008. The reading is in line with Westpac's expectation unemployment will drop to 5.5 percent in the most recent quarter. Perceptions of job opportunities a year from now rose to a net minus 3.7 percent from minus 4.1 percent.

Respondents' expectations for their own job security rose to 17.9 percent from 17.6 percent, remaining at a five-year high.

The net percentage of people expecting a rise in earnings in the next year rose to 37.8 percent from 34.2 percent, the highest reading since December 2010. Those reporting higher earnings over the last year rose to a net 31 percent, from 28.4 percent and has risen eight out of the last nine quarters to be at the highest level since December 2008, Westpac said.

The survey was conducted between Sept. 1 and Sept. 12, with a sample size of 1,555.

BusinessDesk.co.nz

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