CORRECT: New Zealand employment confidence falls to 3-year low on weak wage growth
(Corrects spelling of Westpac economist Satish Ranchhod)
By Jonathan Underhill
Sept. 28 (BusinessDesk) - New Zealand employment confidence turned pessimistic in the third quarter, falling to a three-year low, with fewer workers expecting a pay rise in a labour market where more people are looking for a job.
The Westpac McDermott Miller Employment Confidence Index fell to to 99.3 in the September quarter, from 102.8 three months earlier. The present conditions index slipped to 92.9 from 96.1 and the employment expectations index dropped to 103.6 from 107.3.
New Zealand's working-age population grew 0.7 percent in the second quarter, outpacing a 0.3 percent rise in employment in the face of record migration, which is keeping wage inflation tame. In the 12 months ended June 30, the private sector labour cost index rose 1.8 percent, "which isn't much above the lows reached during the global financial crisis," said Westpac Banking Corp senior economist Satish Ranchhod.
"The number of workers expecting a pay increase over the coming year has fallen to its lowest level since the survey began in 2004," Ranchhod said. "This is a particular concern as the recent fall in the New Zealand dollar will result in the prices for many goods pushing higher over the coming months. As a result, many households may find their budgets becoming increasingly stretched over the coming year.”
Across 11 regions, seven recorded a decline in employment confidence, with the gloomiest sentiment in Northland, which became slightly less pessimistic in the third quarter at 91.6 compared to 90.2 three months earlier. In Auckland, confidence dropped to 100.7 from 107.8, holding just above the 100 level that separates optimists from pessimists. Waikato's confidence fell to 96 from 96.7.
Bay of Plenty was one of three regions to turn pessimistic in the latest quarter, falling to 96.6 from 101.3, while Southland's reading dropped to 96.6 from 106.2, the biggest deterioration, and Gisborne and Hawkes Bay fell to 91.9 from 101.3. Canterbury was the biggest bright spot, with confidence rising to 108.5 from 106.3, while Nelson/Marlborough/Westland became optimistic with a reading of 100.3 from 99.4.
Ranchhod said challenges in the dairy and forestry sectors was weighing on confidence in regions such as Northland, where they are major employers.
"Concern around earnings in the dairy sector has been front of brain," he said. "These conditions have already seen businesses scaling back their hiring intentions."
The survey's measure of current job opportunities weakened to -33.5 from -28.5 , while expected job opportunities deteriorated to -19.9 from -13.3. Past earnings growth slipped to 19.4 from 20.6 and expected earnings growth fell to 22.7 from 27.8.