All eyes will be on labour market data

Craig Ebert.
Craig Ebert.
The most important category of numbers in today's quarterly survey of business opinion would be those relating to the labour market, BNZ senior economist Craig Ebert said yesterday.

The New Zealand Institute of Economic Research (NZIER) will release its quarterly survey this morning.

Economists and others regard it as the most important domestic report out this week.

Mr Ebert said it would appear the labour market was ''going nuts''.

Figures out from Trade Me Jobs showed job advertising for the March quarter was up 21% on a year ago, following as 17% annual gain in December.

''If this can be taken as a proxy for job security, then it's looking very good indeed for households.''

From the point of the business sector, the implication was staffing constraints. Booming immigration would help in that respect but it had been outpaced by the strength of demand for employees, he said.

''The survey staffing constraint variables will be worth their weight in gold. They have already crept up into a zone indicative of a modest tightening in the labour market through 2013.''

The BNZ expected the reported difficulty in finding staff in today's survey - whether for the skilled or unskilled - would become more noticeable. Following the logic, an increase in wage and salary inflation could not be too far off, Mr Ebert said.

The labour market data would probably be more informative of core inflation trends and risks than would immediate pricing intentions regarding products and services.

The latter was still being suppressed by the high New Zealand dollar and that should be born in mind when reading the data.

There was a good chance today's survey result would be even stronger than it was in January, he said.

''In terms of headline numbers, it's worth bearing in mind seasonal impacts are normally depressing for the March quarter. This is presumably as the festive rush is fading from the system.

"And so even if net confidence stalls at around last quarter's highly creditable 52 points, it would imply a further gain in seasonally adjusted terms.''

The survey was expected to log strong business confidence in the general economic outlook but there would also be interest in the business activity and capacity measures, he said.

Also out today were the Crown accounts and focus would be on whether tax revenue was making up for early lost ground due to timing issues.

The path to surpluses looked as assured as ever and the latest Government view would come in the May 15 Budget.

In Australia, job advertisements have continued to rise, suggesting stronger labour demand and improving conditions in the job market.

Jobs ads rose 1.4% in March, following a 4.7% jump in February, according to ANZ's monthly job ad series.

Internet job ads rose 1.3% while newspaper ads bounced 4.5%.

Advertising had risen for five consecutive months in trend terms, the report said.

ANZ chief economist Ivan Colhoun said there was now clearer evidence that labour demand was strengthening.

''Each of the main job ads/vacancies measures have risen this year, while some have been improving since the end of last year.''

Advertising had strengthened in key industries including construction, education and health, he said.

''This suggests the peak in the unemployment rate may be close, although the rate of improvement in job advertising does not suggest a rapid fall in the unemployment rate,'' Mr Colhoun said.

Overseas, the United States reporting season starts today with Alcoa. Wells Fargo and JP Morgan report on Friday.

Craigs Investment Partners broker Chris Timms said expectations were low. Consensus expectations were for earnings growth of just 1.2% and revenue growth of 2.7% - compared with earnings growth of close to 10% for the final quarter of last year.

The best performers were expected to be the telco and consumer discretionary sectors, while energy and financial sectors were forecast to lag.

The weather was one reason the quarter was likely to be lacklustre, he said.

''A ratio of negative pre-announcements to positive ones is currently running at six to one. A number of companies have singled out the long, disruptive winter as having been a drag on operations.''


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