5 Aug 2013

Job figures expected to show small rise in unemployment

7:14 am on 5 August 2013

Job figures out this week are expected to show slow employment growth and a small rise in unemployment.

Three sets of labour data will be released on Wednesday: the June quarter Household Labour Force survey gives an indication of unemployment; the Labour Cost Index shows changes in wages and salaries; while the Quarterly Employment Survey measures total earnings and paid hours.

The unemployment rate of 6.2% is expected to rise by 0.1%.

However, economists say there are signs of good growth in the labour market with recent surveys showing businesses' hiring plans are well above the 10-year average.

ASB senior economist Jane Turner said that after a sharp rise in employment numbers and a strong fall in unemployment the last quarter, the household labour force survey is set to show a small correction.

She said general indicators of employment demand are continuing to improve as New Zealand's economic recovery has gained some further traction.

Ms Turner said employment intentions continue to rise and there has been continued growth in hours worked.

ANZ economist Mark Smith said the labour market is still volatile. But he said the Reserve Bank will be watching the figures closely for signs of wage rises putting pressure on inflation.

Mr Smith expects the Labour Cost Index to show a 0.5% rise in wages from the previous quarter, and an annual increase of 1.8%.

But rising costs in Christchurch, including wages, are poised to flow through to other sectors.

He said if there is continued high construction cost inflation and wage inflation it will permeate through to other sectors, which in turn will lead to wage and price increases throughout the economy.

Mr Smith said the labour market has been the missing ingredient in the economic recovery.

He said the figures are likely to point to a pick-up later in the year.