English says bubbling jobs market may cool, wage growth and inflation to pick up

Wednesday 1st February 2017

Prime Minister Bill English says he expects employment growth to slow after the labour market achieved a record participation rate in the fourth quarter while signs were that inflation and wage growth would pick up.

"There's always cycles in an economy, a very large number of jobs were created last year, a lot of people coming into the workforce, the highest participation rate we've ever had," English told journalists at the Beehive. "As the cycle goes through we'll see that slow down and inflation, wage growth pick up."

English said wage growth was "moderate but consistent" and said bond rates were indicating a pickup in inflation.

Figures today showed the participation rate was a record 70.5 percent in the fourth quarter, while wage inflation remained muted, with the ordinary time private sector labour cost index increasing 0.4 percent in the quarter.

The yield on New Zealand 10-year government bonds has climbed from a low in August of about 2.14 percent to about 3.36 percent currently, a move of 1.2 percentage points.

English made the comments at a media conference to announce the next general election would be held on Sept. 23.

English continued the practice established by predecessor John Key, who believed the public favoured certainty over the election date rather than the tradition of the ruling party keeping the date close to its chest to keep opposition parties guessing.

English said the economy will always be "the central issue" of the election.

BusinessDesk.co.nz

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