Unemployment and wage data out this week are likely to cause
their usual amounts of uncertainty about the state of the
The economy weakened over the September quarter, as did
indicators of the labour market.
However, the June quarter employment and unemployment figures
were probably "too bad to be true", and on balance,
economists are expecting some payback from the weakness.
Tomorrow, the Labour Cost Index and the Quarterly Employment
Survey will be released, followed on Thursday by the
Household Labour Force Survey, the official measure of
Westpac economist Felix Delbruck favoured the LCI as a
preferred measure of wage inflation because it was "purified"
of changes in the job mix and in labour productivity.
The quarterly survey's average wage was both harder to pick
and less meaningful as it was heavily affected by changes in
the mix of jobs in the economy and in the survey sample.
Westpac was forecasting wage growth in all sectors, excluding
overtime, to have risen 0.6% in the three months ended
September to give annual wage growth of 2%. Private sector
wage growth was forecast to have grown 2.1% annually
excluding overtime and 2.5% including overtime. Private
sector wages as measured by the quarterly survey are forecast
to have grown by 0.8% in the quarter and 2.4% annually.
"There is nothing to suggest a strong updrift in wage growth
right now, pockets of strength in Canterbury aside. While
there's some reason to think the 'trend' rate of unemployment
has dried up as a result of the Canterbury earthquakes,
unemployment well above 6% is north of a trend."
Inflation expectations had fallen and LCI wage inflation was
expected to be below its seasonal average for the September
quarter, Mr Delbruck said.
The Household Labour Force Survey was hard to forecast at the
best of times and surprises almost invariably got a market
With the economy undergoing significant shifts in
composition, New Zealand was experiencing unusually uncertain
times, he said.
Westpac was forecasting an unemployment rate of 6.7% for
September, down slightly from 6.8% in June. The participation
rate was expected to have gone up slightly to 68.5% but hours
worked were expected to have fallen 1.1%.
Increasingly, there was a two-speed economy and labour
market, and that could be affecting the business surveys used
as labour market indicators, Mr Delbruck said.
Canterbury reconstruction was accelerating rapidly while
other regions and industries were sagging.
"There's a risk that the surveys are understating that
localised strength - they count the responses of businesses
not how many people those businesses are hiring or firing."
• Employment growth: 0.8%
• Unemployment: 6.7%
• Hours worked: -1.1%
• Wage growth: 2%