Economists say growth in wages and employment does not change the overall gloomy economic picture.
Statistics New Zealand figures show in the last year, salaries and wages increased over the past year at their highest annual rate in 16 years, while employment also continued to grow.
The Labour Cost Index showed an increase of 3.5% for all salary and wage rates, including overtime, in the year to the June 2008 quarter. Statistics New Zealand says this is the largest annual increase since the index began in 1992.
Economists at ANZ and Goldman Sachs JB Were say the stronger than anticipated wage inflation does not change how the economy is tracking overall. They say long lags in labour market data mean wage inflation is still high, and may lead to job losses and less wage bargaining power.
Statistics New Zealand says employment also continued to grow, driven by an increase in full-time positions. As measured by full-time equivalent employees, employment increased 2.5% for the June 2008 year.
The industries contributing most to the rise were manufacturing, health and community services, transport, storage and communication. However, employment in the retail sector fell in the year to June.