New Zealand is embarking on a period of high employment growth but also rising unemployment rates as labour supply outstrips job availability.
Statistics New Zealand data out tomorrow is expected to show New Zealand's unemployment rate rising to 5.9% to 6%, according to economists polled by the Otago Daily Times.
The participation rate is expected to be close to 70% as the robust employment growth seen since mid-2013 continues.
Economists are expecting a 0.6% lift in employment, taking annual employment 3.5% above year earlier levels.
''Make no mistake, this is grunty employment growth,'' BNZ senior economist Craig Ebert said.
''That annual pace is nearly double the average over the past 15 years.''
It suggested economic growth in the three months ended June was solid, even if the trend was softening and the outlook was for slower growth.
While the outlook was always uncertain, a BNZ estimate would indicate the economic expansion to date had been job rich, he said.
Mr Ebert expected the unemployment rate to be 5.9% for June but, more importantly, he expected the rate to move higher from here.
A rising unemployment rate in the future would be against the trend forecast by the Reserve Bank and support further official cash rate cuts.
ASB chief economist Nick Tuffley was also concerned about a rising unemployment rate.
''This can also be described as the `encouraged worker' effect.
''This is exactly what has happened over recent quarters as the pool of workers has expanded at an even greater rate than employment.''
The unemployment rate was 5.5% in September last year but had risen to 5.8% over the subsequent two quarters.
If forecasts of employment growth and participation proved correct, the unemployment rate should lift to 6%.
Also out tomorrow is the Labour Cost Index.
Mr Tuffley said with the economy and employment growing at an annual rate of more than 3%, on the surface it was surprising wages were not growing at a similar rate.
He expected the index for the private sector to lift by 0.45% over the quarter and 1.7% for the year.
''Despite very low nominal wage growth, real wage growth is actually strong right now, a reflection of near-zero inflation.
''Our view on the high participation rate and slack within the labour market means we see risks to the Reserve Bank's employment growth and unemployment rate forecasts.
''But the Reserve Bank's wage inflation forecasts are in line with our own view of remaining under 2%.''
Financial markets would focus on the inflation aspects of the survey, rather than growth, Mr Tuffley said.
A lift in the unemployment rate always captured people's attention but markets would also be sensitive to weak increases in labour cost indices and other wage measures such as average hourly earnings.
