Employment confidence steady, pay expectations and job security drop
New Zealanders became slightly more confident about job opportunities in the December quarter, though most people aren't expecting a pay rise this year.
The Westpac McDermott Miller employment confidence index rose 0.1 points to 113.9 in the fourth quarter, the highest level in a decade, with the present conditions index up 2.2 points to 117.9, while the employment expectations index dropped 1.4 points to 111.2.
Expected earnings growth dropped 1 point to a net 24.3 percent of employees who anticipate a pay rise over the coming year, which senior economist Satish Ranchhod said was around the confidence levels seen during the global financial crisis.
"This nervousness about earnings growth is widespread, and is particularly acute in regions such as Gisborne/Hawke's Bay and Canterbury," Ranchhod said in his report. "It's also evident across most income groups."
New Zealand's strong run of economic growth has been supported by a nationwide construction boom, record tourism, strong inbound migration, and the recent recovery in the dairy sector. The net inflow of migrants has largely kept wages flat, even as firms find it increasingly hard to attract skilled labour.
Ranchhod noted there was one exception to this pessimism — households earning less than $30,000 per year "have become notably more upbeat about the earnings outlook", with the number of households in this income bracket reporting that they received a pay increase over the past twelve months having risen sharply since the start of last year. The unemployment rate dropping to a nine-year low in 2017, and planned increases to the minimum wage, are behind this lift in expectations, he said.
Today's employment confidence survey shows of the 1,555 people surveyed, a net 26.8 percent experienced past earnings growth, down from 29.8 percent in the September quarter.
A net 9 percent of those surveyed saw more job opportunities currently, an improvement from a net 1.7 percent in September, while a net 2.1 percent were optimistic about expected job opportunities, from -0.5 percent. Job security dropped 5.7 points to a net 7.3 percent saying they expect to be more secure over the coming year.
According to the latest survey, market confidence in Wellington rose 10.5 points to 113.3 in the quarter, and more Wellingtonians expect to receive a pay rise over the coming year - Ranchhod said the possible expansion of the public services following the change in government is likely to have given sentiment in the region a boost.
However, in Auckland, confidence fell back 5.7 points to 114.1, with the slowing housing market weighing on peoples' minds. A growing numbers of Aucklanders were also concerned about their job security, Ranchhod said. Canterbury saw market confidence slip 1.7 points to 113.5 as the peak of the earthquake rebuild has passed, meaning the pace of economic growth has slowed and unemployment has risen.
Northland became the most upbeat region in the country, up 10.5 points to 120.5 in the quarter, while Southland became the most pessimistic, dropping 8.4 points to 106.9.