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New Zealand employment confidence slipped in the third quarter, ending four consecutive quarterly rises, as expectations of job opportunities fell, according to the Westpac McDermott Miller Employment Confidence Index. The index dipped to 102.8 in the third quarter from 104.2 in the second quarter on a scale where 100 separates optimists from pessimists, reports nbr.co.nz.
While the latest index reading remains the second-highest of the past two years, it underscores the slow and halting pace of improvement in the labour market in the years since the end of the recession, Westpac said. The latest results suggest improvements in labour market conditions are accruing more to those already in work than to those seeking work as wage growth and job security show the biggest lifts from their post-recession lows, while job opportunities remain slim.
John McDougall, director of forecasting and Strategy Planning Consultancy at McDermott Miller, said: “The pattern for the employment confidence of the Private Sector employees to be above that of their Public Sector counterparts is continuing. The Employment confidence Index for Private Sector employees declined marginally from 107.6 in June to 106.7 in September. In contrast that for the Public Sector increased slightly, from 98.0 to 99.3.”
“Of the five questions that underlie the Employment Confidence Index, Private Sector employees have the more positive net responses on four. These are perceptions of current job opportunities in NZ (11.8 points higher than Public Sector employees), expected job opportunities in NZ (14.8 points higher), expectations of personal earning (2.7 points higher), and job security (10.9 points higher). Only on perceptions of personal earnings over the past year are Private Sector employees less positive than Public sector employees (by 3.1 points).”
In the latest quarter, the biggest decline was seen in confidence in current and expected job opportunities, partly reversing a sharp rise in the second quarter. Confidence in current job opportunities fell to a net index of -51.9 from -48.6 while confidence in expected job opportunities over the coming year slipped to a net index of -5.8 from -0.2.
The latest reading suggests the third quarter unemployment rate is unlikely to budge much from its previous reading of 6.4%, Westpac said.
In contrast, confidence in current and expected earnings growth picked up, while job security eased slightly but remained at a relatively positive level. Expected earnings growth showed the biggest advance, increasing to a net index of 32.6 from 29.9 in the second quarter.
The net percentage reporting higher earnings rose for the fifth straight quarter and was the highest since December 2011, Westpac said. Still, that is not yet reflected in official figures with the Labour Cost Index showing a slowdown in wage inflation over the last year.
Canterbury led other regions in employment confidence, advancing to an index of 113.1 from 110.6 in the second quarter. It was briefly overtaken by Waikato last quarter as drought concerns eased.
Employment confidence rose in Northland and Southland, bringing both back into optimistic territory. Southland may have been buoyed by optimism about the future of the Tiwai Point aluminium smelter, Westpac said.
Meanwhile, Wellington was the most pessimistic region, declining 3.8 to a net index of 96.3, scoring low on job security and past earnings growth.