Workers are feeling less confident about the health of the labour market and the deterioration in dairy earnings is affecting confidence in the main milk-producing regions of New Zealand.
The June Westpac McDermott Miller Employment Confidence Index, released yesterday, fell to 102.8 in the three months ended June.
That is down from a level of 108.5 in March and the lowest level in two years.
Employment confidence fell in nearly all regions.
But confidence fell most sharply in rural regions, including Canterbury, the Waikato, Northland and Southland.
Westpac senior economist Satish Ranchhod said falling regional confidence likely reflected the deterioration in the outlook for dairy earnings in recent months.
In the case of Canterbury, signs the rebuild activity was approaching its peak might also be playing a role.
Otago's confidence fell 4.9 points to 98.4 from 103.3 in March.
There was also a sharp fall in labour market confidence in Wellington, with workers noting particular concern around earnings growth.
Mr Ranchhod said that might reflect the low level of wage growth in the public sector.
According to the Labour Cost Index, wage rates in the public sector rose by only 1.2% in the year to March - about half the average seen in the past decade.
''Labour market confidence is strongest in Auckland where population growth and strength in the housing market continue to boost economic activity.
"But even here, the confidence was down a little in June. And as with other regions, it's earnings growth that has been weighing on workers' minds.''
Among respondents to the survey, the proportion of workers who received a pay increase over the past year had fallen to its lowest level since 2010, he said.
Even for those workers who had received wage increases, they had been ''pretty modest''.
The Labour Cost Index showed wage rates rose by only 1.7% in the year to March, which was not much above the lows reached during the global financial crisis.
In part, the softness in wage inflation reflected unemployment had increased in recent quarters, making it harder for workers to negotiate pay increases, Mr Ranchhod said.
Also, there had been low consumer price inflation over the past year.
''This means that cost of living adjustments to wages have been limited. However, it's also meant that households' purchasing power has actually risen strongly over the past year.''
Looking ahead, workers were not expecting things to get much better anytime soon.
The proportion of respondents expecting wage increases in the coming year was at its lower level since 2009.
That was of particular concern as petrol prices had been pushing higher recently, eroding the purchasing power of households, he said.
On the top of all that, the fall in the New Zealand dollar would push up the prices for a range of imported goods in coming months, he said.
In addition to concerns around earnings growth, workers had become more nervous about their employment prospects, the survey showed.
Perceived job security had fallen from already below-average levels.
Workers had also reported heightened concerns about the current availability of jobs, as well as the likelihood of finding a job in the coming year, Mr Ranchhod said.
''These survey measures have tended to have a close relationship with the unemployment rate and suggest we're unlikely to see a significant improvement in unemployment in the near term.''
The softening in employment confidence came on the back of signs the domestic economy had lost some steam.
Economic growth in the first quarter of the year was a ''paltry'' 0.2%, business confidence and retail card spending had moderated and the outlook for dairy export earnings was subdued, he said.
*The survey took place from June 2 to 13 and the sample size was 1581.
