Thursday 28th March 2019
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Employment confidence ebbed in the March quarter as workers became gloomier about pay rises in the coming year.
The latest Westpac McDermott Miller Employment Confidence Index fell 7.1 points to 114.2 in the latest quarter. That reversed a 6.8 point increase in the December quarter but still indicates a tight labour market.
“Perceptions about job opportunities were down slightly in March but they are still higher than in any prior period since the 2008 Global Financial Crisis,” says Westpac chief economist Dominick Stephens.
“However, workers are markedly gloomier about pay increases. The share of workers reporting a rise in their earnings over the last year fell sharply in March and expectations of a pay rise in the coming year are at a record low,” Stephens says.
“There are two starkly different narratives emerging about wage growth,” he says.
Businesses are increasingly concerned about upward pressure on wages in a tight labour market but workers are less confident that those wage increases will be forthcoming, he says.
“Which of those narratives prevails will be a key issue for the economy over 2019.”
Richard Miller, managing director of McDermott Miller, says the index is back at the level it was in September last year.
“The steepest fall in confidence was among young employees,” Miller says. “They are finding jobs more difficult to get with fewer opportunities compared to last year.”
Among the regional results, employee confidence in urban Auckland fell 12.8 points to 113.2 and was down 18.7 points to 103.3 in the Waikato. However, it was up 11.9 points to 125.6 in the Bay of Plenty.
Canterbury was down 7.1 points to 111.9 and Southland was down 9.3 to 115.4 but Otago was up 0.6 of a point to 121.0.
The capital was little changed, down just 0.1 of a point to 119.2. Miller says public servants were more optimistic than those in the private sector.
The survey was conducted between March 1 and 10 and had a sample size of 1,556 people.
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