New Zealanders have become increasingly optimistic about the state of the labour market.
The Westpac McDermott Miller Employment Confidence Index rose to 112.7 in December, the highest level for eight years.
Westpac acting chief economist Michael Gordon said yesterday the rise came against a backdrop of strong economic growth and job opportunities continuing to increase.
Increases in employment confidence had been broad-based. The largest gains had been in the regions and the improved outlook for the dairy sector was a likely factor in supporting confidence in the labour market and economy more generally.
"While workers are more optimistic about their employment prospects, they’re still concerned about earnings growth. This will be an important issue for the economy over 2017."
Consumer price inflation was set to rise and it could erode the purchasing power of households, he said.
Reviewing the index results showed workers had reported a sizeable lift in the likelihood of finding a job. They also thought the jobs market would continue to improve in the coming year.
Workers did report a slight drop in job security in December, following a sharp increase in September. Job security was still at firm levels.
Otago and Canterbury were the only regions of the 11 surveyed to show a fall in employment confidence. Otago dropped 1% to 104.6% and Canterbury dropped 14.5% to 107.9%. Every region remained in positive territory. Southland was up 3.8% to 111.7%.
Looking at the major centres, employment confidence continued to improve in Auckland and Wellington. In both regions the improvement reflected the increased availability of jobs and expectations employment prospects to improve.
Mr Gordon said Canterbury’s economy, including its labour market, was in a period of transition. In recent years, reconstruction activity following the 2010 and 2011 earthquakes boosted economic growth and labour demand. Many sectors outside of construction also felt the benefits from the increase in economic activity.
Planned reconstruction spending was now well advanced and had started to gradually wind down, he said.
"That doesn’t mean construction activity is going to suddenly stop but we won’t see things running as hot as they did in recent years."
Given the large boost the rebuild provided to the labour market in recent years, it was not surprising to see employment confidence softening, he said.
