Evidence suggests the New Zealand labour market continued its trend of slow improvement in the three months ended September, but economists are warning that volatility may cause a surprise.
"Anything could happen," Westpac chief economist Brendan O'Donovan said.
A raft of data is expected, starting tomorrow with the quarterly employment survey and the labour cost index.
On Thursday, the household labour force survey, the official measure of unemployment, will be released by Statistics New Zealand.
Mr O'Donovan said the labour force survey went on a wild ride during the first two quarters of this year.
Unemployment plunged from 7.3% to 6% before rebounding to 6.8%.
Employment growth mirrored the pattern, rising 1% in the first quarter before falling 0.3% in the second quarter.
"It's highly unlikely that official labour force survey data represents the true performance of the labour market.
"But that begs the question of how the labour market has actually been doing."
The broader suite of indicators painted a picture of a labour market that had been gradually improving throughout the year, he said.
The pace of improvement probably slowed in June, reflecting a broad loss of confidence.
Westpac expected more of the same for the September quarter.
Surveys portrayed firms that were only slightly more willing to hire new labour, and suggested it was only marginally more difficult to find skilled labour, Mr O'Donovan said.
"The labour market probably experienced another quarter of slow improvement, a view we have expressed in our forecast for low positive employment growth and a small decline in unemployment."
The quarterly employment survey would contain an alternative read on the labour market, he said.
Seasonally-adjusted filled jobs rose 0.5% in the June quarter and the September quarter was expected to register a similar performance.
However, the quarterly survey would not trump the household labour force as a labour market indicator.
Although the quarterly survey had been more stable recently, it had exhibited its own volatility in the past.
The best way to read the labour market was to treat each individual release as one part of the mosaic which, when pieced together, gave a clearer picture of what was going on, Mr O'Donovan said.
The labour cost index, released at the same time as the quarterly survey, was the best measure of wage inflation.
Quarterly wage inflation had languished at 0.3% and 0.4% for the first quarters of the year but was expected to be 0.6% in September.
Most people received their pay rise in the second half of the year, and for each of the past 10 years second-half wage inflation had been stronger than first-half.
The labour cost index was not seasonally adjusted.
Also, with the labour market on an improving trend, wage inflation could be expected to begin its long, slow grind higher.
"This is likely to manifest not as larger pay rises but as a greater proportion of workers getting a raise," Mr O'Donovan said.
