An economic think tank says latest figures point to a stronger economic recovery which will prompt firms to hire more people.
The New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion found domestic trading activity maintained the momentum set in the December quarter, and edged up to its strongest reading since June 2007.
NZIER principal economist Shamubeel Eaqub says the recovery is becoming more broad-based, spreading from Canterbury and Auckland to other regions, and indicates annual growth of about 3%.
Employment tends to lag while firms delay hiring until they're sure the recovery is sustainable, and Mr Eaqub says it appears business may be at that point, with hiring consistent with about 2% annual employment growth.
"We're seeing pretty consistent evidence of hiring picking up across New Zealand and across sectors, so we are very optimistic we are seeing a labour market that is getting better."
As long as the economic recovery continues, he expects unemployment to drop over the next one to two years.
Mr Eaqub says the Reserve Bank will need to keep interest rates low for the rest of the year, mainly because there is very little inflation in the economy.
He says production constraints are mostly confined to Canterbury due to its massive building programme, and only if they spill over into general inflation should the central bank raise the Official Cash Rate.