A higher labour force participation rate for the three
months ended September is expected to reflect more jobs
becoming available, while more Kiwis return from Australia
where they are not eligible for benefits.
ASB economist Daniel Smith said despite his expectations of
''decent'' employment growth, he was forecasting only a
slight drop in the unemployment rate.
At the end of June, the number of people in work nationally
was only 0.7% higher, following a large drop in employment
over the second half of 2012 which took the unemployment rate
up to 7.3%.
''Since then, we have had a strong rebound in employment over
the first half of 2013. While New Zealand labour market data
is notoriously volatile, we can now hope for a return of a
more steady pattern or employment growth.''
Statistics New Zealand will release its wage and salary data
on Wednesday, along with the Household Labour Force Survey
results. All of the wage and employment data is now released
on one day.
Mr Smith said a significant proportion of the strength in
employment growth was likely to come in Canterbury, where
employment fell by a surprising 1.6% in June.
There was scope for a rebound in the September numbers.
Beyond Canterbury, the employment growth was expected to be
On top of the cyclical effect, New Zealand's migration flows
were also likely to push up the participation rate over the
next year or so.
In the past year, there had been a sharp drop in the number
of New Zealanders leaving for Australia and, recently, there
had been a sharp increase in the number of Kiwis moving back
from Australia to New Zealand.
Both of those categories, particularly the latter, who were
usually ineligible for unemployment benefits in Australia,
were likely to be ''active'' in the labour market, he said.
''As job opportunities in Australia have diminished, a
release valve within the New Zealand market has been turned
off. As a result, we should see a more active and larger
working age population. The result is likely to be a very
gradual decline in the unemployment rate, despite decent
Wage growth had slowed in the past 12 months, mainly because
of a low inflation rate, which was used as a benchmark in
wage negotiations, Mr Smith said.
The number of firms reporting difficulty finding suitable
workers had also been rising, which kept workers'
wage-setting power low.
Wage growth was expected to remain low but one area to watch
closely was labour costs in the construction sector.
Construction labour costs in Canterbury had been rising
faster than the rest of the country but had not yet
accelerated to a problematic level, he said.
• Unemployment rate to fall slightly, to 6.3%
• Higher participation rate because of returning Kiwis
• More companies plan to add staff
• Wage growth to be muted