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Earnings concerns mounting - Westpac

Fuseworks Media
Fuseworks Media

The Westpac McDermott Miller Employment Confidence Index fell by 2.9 points to 114.5 in September. That still leaves confidence in overall labour market conditions at firm levels. However, households have become increasingly concerned about the outlook for their incomes.

"The number of workers who reported a pay increase over the past year has fallen to a three year low," said Westpac Chief Economist Dominick Stephens. "There has also been a sharp drop in the number of workers who expect to receive a pay increase over the coming year, down to very low levels. Nervousness about wage growth comes despite a number of high profile collective wage negotiations in recent months and the well publicised increase in the minimum wage."

"The lack of confidence around income growth matches what we are seeing in hard data," noted Mr Stephens.

"Wage growth has remained stubbornly low in recent years, even as economic activity has firmed."

"Workers are still fairly confident about their chances of finding a job, matching the low level of unemployment," said Mr Stephens.

"Employment confidence in New Zealand dipped a little this September quarter, but remains firmly optimistic," announced Richard Miller, Managing Director, McDermott Miller Limited (down 2.9 index points to 114.5 on the Westpac McDermott Miller Employment Confidence Index).

"Geographically, only rural New Zealand and Wellington Urban respondents are more optimistic about the employment situation than they were in June," observed Richard Miller (rural employees up 4.5 points to 115.9, and Wellington Urban employees up 3.2 points to 119.7 on the Employment Confidence Index).

"Public sector employees are now more confident about the current and future New Zealand employment situation than private sector employees (public sector up 4.5 points to 119.8, compared to the private sector down 3.1 points to 116.0 on the Westpac McDermott Miller Employment Confidence Index)," stated Richard Miller. "Now that the coalition Government has settled in, public sector employees seem more confident about increased earnings over the year ahead, but interestingly, are less certain about job security," observed Richard Miller.

Further details are in the attached bulletin and Technical Note.

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