Unemployment figures are expected to have fallen in the three months ended March following figures released yesterday showing encouraging signs in employment demand.
Statistics New Zealand figures showed wage growth was softer than expected in the March quarter, with the private sector and all ordinary time Labour Cost Index both increasing by 0.4%.
In the year ended March, all salary and wage rates in all sectors - including overtime - increased 1.9%.
ASB economist Jane Turner said the data pointed to a gradual recovery in wage growth from very subdued levels.
"Wage growth has picked up from the rapid deceleration seen a year ago as firms controlled wage costs during the recession.
But the patchiness of the economic recovery, and subdued profitability, are continuing to weigh on wage growth."
Ms Turner expected an improvement in employment demand would flow through to a continued recovery in wage growth in the coming year.
While wage increases were slightly softer than expected, there were encouraging signs for employment in yesterday's data.
The Household Labour Force Survey is due out tomorrow.
Total hours paid increased 0.7% in the quarter and were up 2% on a year ago.
The combination of increased hours, along with the modest increase in wages, resulted in a 1.2% increase in total gross earnings in the March quarter and a 4.6% increase in the year ended March.
"The reasonable pace of household income growth should help underpin a recovery in consumer spending later this year," Ms Turner said.
Council of Trade Unions economist Bill Rosenberg said wages fell well behind price increases in the past three months for most people. But top executives were getting percentage pay increases in double digits.
"Wages fell behind prices in the last three months. And this was on top of the effects of the increase in GST and other government charges which largely showed through in the previous quarter."
For the full year, wages rose less than the cost of living increased. The same people who received little in the way of tax cuts in October were feeling the effects of rises in the cost of essentials, he said.
