Tuesday 7th February 2012
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New Zealand wage inflation accelerated for private sector workers and slowed for public servants in the fourth quarter, leaving overall labour costs benign enough to ensure the central bank keeps interest rates low.
The labour cost index rose 0.6 percent in the three months ended Dec. 31, beating the 0.5 percent forecast by a Reuters survey of economists, with private sector wage inflation at a quarterly pace of 0.7 percent and public sector at 0.4 percent, according to Statistics New Zealand. The bulk of the public sector’s gain came in local government, with a 1 percent expansion in the quarter, outpacing the 0.4 percent growth in central government salary and wage rates.
Private sector wage inflation grew 2 percent in the 2011 calendar year, faster than the 1.8 percent expansion in the public sector. Across both sectors, the annual pace was 2 percent.
Total private sector average hourly wages were flat at $24.58, while overtime rates shrank 1.8 percent in the quarter, according to the Quarterly Employment Survey, also released today. Total public sector wages rose 0.8 percent to $33.86 an hour, even as overtime sank 6.3 percent.
The tepid pace of wage inflation means Reserve Bank Governor Alan Bollard doesn’t have pay negotiations hanging over his head when he next reviews monetary policy in March. With consumer prices remaining relatively static, he will be able to keep the benchmark interest rate at a record 2.5 percent for longer.
Last month, Bollard signalled increased bank funding costs will lift interest rates independent from the OCR, and the eventual Canterbury rebuild next year will create a construction boom that will introduce inflationary pressures.
Today’s data comes before Thursday’s release of the Household Labour Force Survey, which is expected to show unemployment fell 0.1 percentage points to 6.5 percent.
Total filled jobs rose a seasonally adjusted 0.5 percent to 1.7 million, beating the 0.2 percent growth forecast by a Reuters survey, with 0.6 percent expansion in full-time equivalent positions (FTEs) to 1.34 million.
Rental, hiring and real estate services showed the biggest quarterly growth, up almost 11 percent to 22,800, followed by accommodation and food services to 72,100, and a 4.8 percent gain in electricity, gas, water and waste services FTEs to 11,000.
Information, media and telecommunications reported the biggest quarterly loss of 3.8 percent to 28,200, and have shed 5.4 percent of its FTEs this year.
Total weekly paid hours rose a seasonally adjusted 0.6 percent in the three-month period to 51.2 million, broadly in line with expectations.
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