New Zealand confidence rose in the final quarter of 2013 to its second highest reading in the last two years, but optimism about wage growth slumped to its lowest in 18 months.
The Westpac McDermott Milller Employment Confidence Index rose to 103.4 in the fourth quarter from 102.8 from the prior quarter, in the scale where 100 separates optimists from pessimists.
While the latest index remains at the second highest level in the past two years, the reading remains subdued with on-going concern around labour market conditions and earnings growth, Westpac said.
“The relatively low level of the index fits with the observation that while the New Zealand economy was gathering a substantial head of steam over 2013 it had yet to reach its full capacity,” the report said.
Much of the negative feeling was seen in wage growth, with the net percentage of expected earnings to increase over the next year fell to a 29 percent, the lowest since June 2012, from a 33 percent in the September quarter. The report attributes low wage growth to continuing depressed inflation.
The tentative rise indicates that pressures on jobseekers are easing. This confidence combined with other indicators such as reported greater hiring or hiring intention, a 15 percent increase in online job advertisements on a year earlier and jobseeker support benefits falling 5 percent, gives weight to the prediction that the unemployment rate will drop below the post-recession range of 6 to 7 percent range in 2014,Westpac said.
“The net percentage of people saying that jobs are easy rather than hard to get rose by five points to – 47 percent. This was the least negative reading since December 2008,” the report said. That “supports our view that the unemployment rate should nudge a bit lower in the December quarter, from its previous outturn of 6.2 percent.”
Employment confidence was not widespread across the nation, with continuing declines in the rural regions, while the three main centres gain. Canterbury continues to lead other regions with employment confidence advancing to 115 from 113.1. Wellington confidence jumped up 7.7 percentage points 104, indicating optimism now outweighed pessimism having previously been the most negative region.
The rise in confidence was focused in middle-income groups, those earning between $30,000 to $70,000. Confidence rose for those aged 30 to 50, while the under-30s felt pessimistic about future employment options.