Earnings surge beats inflation

By SIMON LOUISSON

Economists say the 0.8 per cent rise in salary and wage rates in the three months to September 30 - the biggest quarterly gain since December 1992 - is still no great threat to inflation.

On an annual basis, the rise was 2.3 per cent compared with annual consumer price index inflation of 1.5 per cent.

"Wages do not appear a significant inflation threat at present," Westpac economist Nick Tufley said.

Statistics New Zealand's Labour Cost Index and Quarterly Employment Survey released yesterday are numbers closely watched by the Reserve Bank for signs of inflation getting away.

The employment survey showed private-sector wages rose 0.6 per cent, half the expectations of economists, with the annual rate falling to 3 per cent from 4.2 per cent in the June year.

The cost index has been tracking at the same annual pace of 2.3 per cent over the past year - the highest rate since the September 1997 quarter, Statistics New Zealand said.

The index showed public sector rates rose 1.1 per cent in the quarter, the largest rise since the June 1998 quarter.

That gives civil servants an average annual rise of 3 per cent. The sector was boosted by the rates for teachers, up 5.8 per cent annually.

The index measures changes in salary and wage rates for a fixed quantity and quality of labour while the survey reflects changes in pay rates as well as compositional and other changes in the work force.

The survey figures showed seasonally adjusted employment, as measured by full-time equivalents, increased by 2.5 per cent in the September year.

Total paid hours worked and total gross earnings increased by 2 per cent and 5.2 per cent respectively.

The number of full-time equivalents fell 0.4 per cent in the September quarter mainly because of a fall of 8400 in the manufacturing sector.

Average hourly earnings increased 1.2 per cent in the September quarter and 3.1 per cent in the year to $19.65.

Average hourly earnings for females rose 1.2 per cent in the quarter to $17.94 while male earnings rose by the same amount to $20.97.

Private sector average hourly earnings rose 0.5 per cent in the quarter to $18.44 while public sector earnings rose 2.6 per cent to $24.27.

Average total weekly earning increased 0.7 per cent in the quarter and 2.7 per cent over the year, to $752.81.

- NZPA