NZ employment levels likely increased by a solid 0.8% in the March quarter - Westpac

Analysts at Westpac expect the NZ’s Household Labour Force Survey to show that employment levels increased by a solid 0.8% in the March quarter, with gains supported by firm economic conditions as well as strong population growth.

Key Quotes

“Increases in employment are expected to be widespread, with the largest gains expected in service sectors (such as professional services) and construction.”

“Labour force participation is expected to nudge higher again in March, taking it a record high of 70.6%. Job growth has encouraged more people to enter the labour market. This has been reinforced by strong net migration. These factors are providing a floor under the unemployment rate, which we expect to remain unchanged at 5.2%.”

“Q1 labour cost index

• Although the labour market has been strengthening, wage inflation remains low. We’re expecting the March quarter Labour Cost Index will show that base wage rates rose by only 1.6% over the past year. Similarly, the broader QES measures of average hourly earnings is expected to have risen by only 1.4% - both largely unchanged from last quarter and still low.
• But while wage growth is currently low, this won’t be the case forever. We expect that strong demand for workers, as well as increasing cost of living adjustments will contribute to rising wage inflation over the coming year.”