Overall confidence in the labour market has eased slightly in September, according to the Westpac-McDermott Miller Employment Confidence Index.
Employment confidence has seen a 2.9 decline in points to a level of 114.5 but remains fairly buoyant compared other confidence surveys, the study shows.
It indicated that workers have shown growing concerns about their incomes – showing pessimism about their chances of getting a pay raise over the coming year.
Employment confidence in Otago and the central North Island has firmed, but has fallen sharply in the upper North Island, especially in Waikato.
According to the Westpac study, employment sentiment can be divided into two parts: households’ views on job openings, and their views on their earnings outlook. The firmness in overall confidence is masking some important details in this split.
In terms of job openings, households remain fairly upbeat on their employment prospects, and while there is a little more nervousness about job security this hasn’t changed materially over the past four years. This likely reflects that, despite the falls in business confidence surveys, economic conditions to date have actually remained fairly resilient. Notably, GDP growth was strong in the June quarter, and the unemployment rate has trended down in recent years.
In terms of earnings, the study shows that the number of households reporting an increase in earnings over the past year has fallen sharply in recent months and is now at a three-year low, the notable exception to this pattern are those workers earning less than $30,000 per annum, many of whom may have benefited from the recent increase in the minimum wage.
This pessimism about the earnings outlook is widespread, and is particularly acute in Northland, Auckland and the Waikato.
Labour market confidence is particularly strong in the Otago, Gisborne/Hawke’s Bay, and Bay of Plenty regions. Economic conditions in these regions have been boosted by improved returns for horticulture exports and solid growth in house prices. Otago is also continuing to see the benefits of strong growth in international tourism. Waikato is the most pessimistic region in the country with regards to the labour market outlook. The spread of the Mycoplasma bovis cattle disease to this key dairy producing region has hit farmers hard and will have flow on impacts for the agri-processing sector.
In Canterbury, employment confidence has fallen in September, leaving it at below average levels, according to the study. GDP growth in the region has cooled since the peak of the rebuild. And while unemployment remains low, it has been creeping higher.
Employment confidence is at firm levels in Wellington.
