INDEPENDENT NEWS

Deutsche Bank Latest Research - Economic Note (NZ)

Published: Mon 6 Sep 1999 02:23 PM
Economic Note (New Zealand) NZ Quarterly Employment Survey - June
Key Points
Average ordinary time hourly earnings in the private sector (the Reserve Bank's wage forecast variable) increased by 0.7% during the June quarter, following a 0.3% increase in the March quarter.
The annual rate of private sector wage inflation was 2.3% in June, down from the increase of 2.7% in the March 1999 year. This was the lowest annual increase since the June quarter 1995.
Comment
The rise in private sector ordinary average hourly earnings of 0.7% for the June quarter was below average market expectations for a 0.9% qoq increase. With the RBNZ's latest projection for annual wage inflation of around 2.6% in the March 2000 quarter, these data are likely to have been marginally below the Bank's projection as well, suggesting slightly less inflationary pressures from labour market activity than anticipated in the August MPS.
Within the total, the health & community services and property & business services made the largest contributions to the increase for the quarter. However, the contribution from the health and community services & education industries reflected a rise in the number of hours paid for in this group, rather than an increase in wage rates - this group has a higher than average wage rate. The increase in property & business services wages was driven by a reasonably sharp rise in the computer services industry and probably reflects the impact of Y2K related demand.
While these data in isolation are unlikely to result in a downward revision to the Bank's forecast wage profile, the softer bias reinforces Deutsche Bank's belief that the Reserve Bank is unlikely to raise the official cash rate at their September 29th review. Nevertheless, looking further ahead, somewhat offsetting the reasonably modest wages outturns, the Household Labour Force Survey (HLFS) has indicated a reasonably early rebound in employment growth and a relatively low peak in the unemployment rate. Moreover, the continuing trend increase in the ANZ job ads series also suggests an on-going improvement in employment prospects.
Further confirmation that labour market conditions may be somewhat tighter than suggested by the QES data has been evident in recent Labour Department wage settlement figures. In particular, average movements in June quarter wage contracts showed an increase of 2.4%. This compares with wage settlements of around the 1.9% level in early 1999 and a trough of 1.6% in the fourth quarter of 1998. Moreover, the distribution of settlements has also moved higher, with a greater proportion of settlements appearing in the 2-4% and 4% plus range. These data, together with survey evidence indicating a growing difficulty in finding skilled labour, suggests some upside risk to the RBNZ's wage profile over the policy relevant one-to-two year time horizon.
This, along with an extensive range of other publications, is available on our web site http://research.gm.db.com
In order to read our research you will require the Adobe Acrobat Reader which can be obtained from their website http://www.adobe.com for free.
For answers to your EMU questions, check Deutsche Bank's EMU web site http://www.db.com/emu or email our helpline business.emu@db.com.
ENDS

Next in Business, Science, and Tech

Services lead GDP growth
By: Statistics New Zealand
Letter to Immigration Minister From Early Harvesting Growers
By: One Plus One
Scientists discover one of world’s oldest bird species
By: Canterbury Museum
Helping regions fill skills shortages and Kiwis come first
By: New Zealand Government
Report: Govt Inquiry into Auckland Fuel Supply Disruption
By: Inquiry into The Auckland Fuel Supply Disruption
NZ economy grows 0.5% in June quarter, beating expectations
By: BusinessDesk
Don’t blame President Trump for slowing economy
By: New Zealand National Party
Labour's big government economic policies continue to fail
By: ACT New Zealand
Kiwi economic growth slows. We need fiscal caffeination
By: Kiwibank
Weakening economic growth shows need for tax cuts
By: New Zealand Taxpayers' Union
Employers pen open letter to Minister in ‘desperation’
By: New Zealand National Party
Dismissive Minister out of touch with reality
By: ACT New Zealand
Labour issues in booming sector
By: Bayleys
Migrant Workers Association criticises work visa overhaul
By: RNZ
More detail needed on migrant worker policy
By: BusinessDesk
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media