KEY POINTS:
An employment confidence survey has taken its biggest tumble in the four years it has been running, although confidence remains firmly in optimistic territory.
The Westpac McDermott Miller employment confidence index fell 8 points to 120.8 in the June quarter.
An index above 100 indicates there are more optimists than pessimists, while a number below 100 indicates that pessimists outnumber optimists.
The tight labour market has provided critical support to the consumer in the past year as interest rates have risen, the housing market has toppled over, and the cost of living has ballooned, Westpac economist Donna Purdue said.
However, even the labour market is now seen as vulnerable to the economic downturn, she added.
Employees are increasingly realising the economic downturn will result in job casualties, she said, adding that the notion jobs will be hard to come by was likely to keep consumers very cautious in the months ahead.
"The shocking employment out-turn in the first quarter of this year (29,000 jobs were lost according to Statistics New Zealand), high profile job losses announced by some major NZ organisations through April and May, and continued pessimism amongst the business community, are just a few of the factors that are likely to have weighed on employee confidence this quarter."
There was little surprise the biggest downward influence on confidence this quarter came from the questions relating to job opportunities.
The balance of respondents thinking jobs are easy to come by at present has almost halved this quarter, while there has been a further increase in those thinking jobs are going to be hard to get next year.
Surprisingly, however, perceived job security improved a little over the quarter, from a net 12 per cent in March to a net 15 per cent in June.
"If there is any good news in the survey it is that, despite employees being downbeat about job opportunities, respondents remain reasonably upbeat about their earnings," Purdue said.
Expectations about future earnings were down only a touch - a net 45 per cent of respondents think their earnings will be higher in a year's time, compared with 46 per cent last quarter.
These findings are consistent with the trends seen in official wage statistics where wage growth has continued to reach new highs over the past year.
- NZPA
