Job market looks better as economy strengthens

‘Last year, employment confidence appeared to have been weighed down by concerns about the impact of drought and lingering softness in global demand.’

NEW ZEALANDERS are more confident about the job market, after a sharp dive in confidence late last year as worries about drought and the global scene hit.

Workers are more upbeat as the economy grows, people feel more secure in their jobs and wages rise.

The Westpac McDermott Miller Employment Confidence Index rose to 108.5 in the March quarter, up from 106.5 in the December quarter.

An index number over 100 indicates that optimists outnumber pessimists.

However, this rise follows a sharp decline in confidence late last year, and still leaves confidence lower than it was through mid-2014.

‘‘Last year, employment confidence appeared to have been weighed down by concerns about the impact of drought and lingering softness in global demand,’’ said Westpac chief economist Dominick Stephens.

‘‘However, the economy has been growing at a firm pace, and indications for the coming year are very positive. These conditions have spurred some recovery in employment confidence in recent months, and we expect that it will continue to strengthen over the coming year.’’

Last year the economy grew at its fastest pace in seven years, and jobs growth was up a strong 3.5 per cent in the year.

March’s increase in employment confidence was underpinned by an improvement in workers’ expected job security, which was up 4.7 percentage points in March to 13.3 points. The perceived availability of jobs has also held up in recent months.

Wages are also looking better. The net percentage of workers reporting that their earnings have increased over the past year rose from 29.7 per cent to 31.3 per cent in March. ‘‘The resilience of earnings growth adds to the very positive picture for domestic demand,’’ said Stephens.

‘‘Coming on top of low consumer price inflation, increases in earnings are providing a boost to households’ purchasing power.’’

More households expect their earnings to increase in the coming year, rising from 29.2 per cent to 32.9 per cent. The resilience in earnings expectations was likely to be a welcome sign for the Reserve Bank, making it more comfortable Westpac chief economist Dominick Stephens to keep the official cash rate on hold, Westpac said.

Employment confidence rose in most regions, and is similar across rural and metropolitan areas.

Confidence rose in eight of 11 regions. But Canterbury is notably more confident than other regions at 116.7, up 2.3 from the December survey.

Increases in reconstruction work and stronger economic activity generally was supporting the job market, Westpac said.

Southland confidence also bounced back strongly in the March quarter, up more than 15 points to 115.8, after falling sharply at the end of last year possibly because of concerns about the dairy sector. Now workers in the Southland region are more upbeat about jobs and wages in the coming year.

Confidence was lowest in Northland and Gisborne/Hawke’s Bay, where unemployment remains high.

The survey was carried out in the first 11 days of March.