According to Statistics NZ, New Zealand’s unemployment rate has been at a record low of 3.2% for the second straight quarter, with annual wage growth at its highest level in 13 years.
Still, the body pointed out that the January Omicron wave caused significant levels of absenteeism, reducing actual working hours during the quarter.
“This was partly due to the fact that many people worked less than usual or were away from work in the March quarter,” said Becky Collet, Senior Labor Statistics Manager, Statistics New Zealand. I am. Said in a statement..
Underutilized levels were slightly higher, up 0.1 percentage points from the previous quarter to 9.3 percent.
“The underutilized level of quarterly growth was primarily due to the growth of potential job seekers available.
Meanwhile, wage inflation reached 3% in the March quarter, almost doubling compared to the same quarter in 2021.
However, this figure is still below the annual consumer price index of 6.9%.
“Wage increases have usually outpaced consumer price inflation over the last decade,” said Brian Downs, Business Price Manager, Statistics New Zealand. Said in the release.. “Wage inflation has been lower than consumer price inflation in the last four quarters, despite strong wage growth.”
New Zealand’s Finance Minister Grant Robertson said the numbers were “very positive” results in difficult environments.
“The results also show that New Zealand once again worked favorably against the countries we measured as New Zealand’s sixth lowest unemployment rate in the OECD,” said Robertson.
“Working hours have decreased as Omicron affected workers’ attendance through illness and self-isolation, but companies continue to hire despite pandemics, ongoing supply chain disruptions and the Ukrainian War. “He added.
Sharon Zorner, chief economist at ANZ Bank, believes the labor market will tighten further throughout the year, saying wage growth is accelerating faster than expected, especially for average hourly wages.
The data also confirm that the Reserve Bank of New Zealand (RBNZ) will see the labor market as a major driver of domestic inflationary pressures this year, she said.
“This will require continuous interest rate hikes to align labor demand with labor supply and sprout potential wage price spirals,” she added. “This is in line with our expectation of a 50 basis point increase in May.”
She also warned that if Australia’s own tightening labor market seduces a significant number of kiwis across the ditch, the labor market that is currently unable to meet demand could be further tightened.
“Given that productivity isn’t rising as fast as wages, this is a very inflationary process,” Zollner said. “That means that the profits workers expect from a tight labor market are simply eaten up by inflation.”
The RBNZ will meet on May 25 to discuss the next move in monetary policy.