Workers' confidence improves but earnings remain a key

The slide in employment confidence was arrested in the December quarter, as the Westpac McDermott Miller Employment Confidence Index rose 2.2 points to 101.5.

"Workers are more upbeat about their employment conditions than three months ago," said Westpac Senior Economist, Anne Boniface. "However, while there has been an improvement, the level of confidence remains well down from that observed back in 2014."

"The improvement in the Employment Confidence Index was led by a lift in the Employment Expectations Index as workers became a little more positive about their own job security and the potential for future earnings growth," said Ms Boniface. "However, compared to a year ago workers remain very cautious about earnings prospects. That’s not hard to understand. Unemployment has been creeping higher while inflation remains very low, making it more difficult for workers to negotiate large wage increases."

Employment confidence rose in most regions in December, with the notable exceptions of the Waikato, Wellington and Canterbury, where employment confidence declined.

The survey was conducted over 1 - 11 December 2015, with a sample size of 1,565. An index number over 100 indicates that optimists outnumber pessimists. The margin of error is 2.5% for a 95% confidence interval.

"The Westpac McDermott Miller Employment Confidence Index improved by 2.2 index points in the December 2015 Quarter," announced John McDougall, Director Forecasting in McDermott Miller. "Confidence is back again to positive territory, with the New Zealand Employment Confidence Index now standing at 101.5."

"The lift in the Westpac McDermott Miller Employment Confidence Index has been led by employees working in the Private Sector, with their confidence now 103.5 after having been, unusually, at the pessimistic level of 99.9 in September," announced John McDougall, Director Forecasting in Strategy and Economics Consultancy, McDermott Miller.

"Private Sector employees’ responses to four of the five constituent questions of the Employment Confidence Index moved in a positive direction. The largest shift is in the net percentage of Private Sector employees expecting their earnings to rise over the next year. Some 28% now expect this, up from 22% in September. Similarly, the net percentage of Private Sector employees expecting their personal job security to improve over the next year rose to 12%, up from 6% in September. However, concerns about the job market remain. A net 16% (the same as in September) expect jobs to be harder to get in a year’s time than now," explained John McDougall.

"The employment confidence of Public Sector employees also returned to positive territory - up 2.7 points to 100.9. This rise is led by an increase in the net percentage expecting their personal job security to improve over the next year (now 10%, up from 5% in September) and a reduction in the net percentage expecting jobs to be harder to get in a year’s time than now - 18%, down from 23% in September," John McDougall noted.

"Public Sector employees with positive views on New Zealand’s short term economic, and by implication employment, prospects are more likely to credit ‘effective government policies’ for their positive outlook (32%) than are Private Sector Employees (27%)," observed McDougall.