Employment confidence spreads beyond Canterbury, Auckland

The army withdrew from Christchurch as the last cordon around the earthquake affected city was lifted on the weekend. Employment confidence has now spread out from Canterbury and Auckland, lifting around New Zealand.

The rest of New Zealand has started catching up to Canterbury and Auckland in terms of employment confidence though jobs are still deemed hard to come by and there's less optimism wages will rise.

The Westpac McDermott Miller Employment Confidence Index rose to 104.2 in the second quarter from 100.7 three months earlier on a scale where 100 separates optimists from pessimists. That's the highest since September 2011.

The survey indicates a gradual improvement in a labour market that is still tracking well below levels before the global financial crisis. Still, it adds to evidence from the Household Labour Force Survey for the first quarter, which showed the unemployment rate fell to a three-year low of 6.2 per cent in the first quarter while people in work jumped 1.7 per cent to 2.23 million, the biggest increase since that survey began in 1986.

Today's employment confidence survey "doesn't suggest the labour market is off to the races - a slow uphill climb is a better characterisation," said Felix Delbruck, senior economist at Westpac Banking Corp.

Confidence in both Canterbury and Auckland slipped in the latest quarter. Waikato has pipped Canterbury as the most confident region, with a reading of 114.9, up from 96.3 in the first quarter, in what Delbruck said may reflect the end of drought in the North Island.

Confidence in Canterbury fell to 110.6 from 113.6, leaving the region in second place, while Auckland's was little changed at 104, relegating the nation's biggest city to fourth place. Among the gainers, Nelson/Marlborough/Westland rose to 104.4 from 98.3 and Otago jumped to 102.1 from 88.8.

Bay of Plenty also turned positive at 103 from 93.9 and Wellington just reached the start point of optimism at 100, up from 97.4 in the first quarter.

"That suggests the labour market recovery may be broadening," Delbruck said. "Easing fears around the North Island drought and surging global dairy prices may have played a role in some regions."

The survey shows perceptions of current job opportunities are dimming, with a net 48.6 per cent of those polled saying jobs are hard to get, a slight improvement on the first quarter's 55.9 per cent who saw jobs as being hard to come by.

The outlook has brightened however, with a net 0.2 per cent saying they expect jobs to be hard to come by in future, an improvement from the 12.1 per cent who expected to struggle finding a job three months earlier. The measure of past earnings growth improved to 26.1 from 24.4 though expected earnings growth fell to 29.9 from 33.3, which may reflect the nation's relatively tame inflation.

"As such, today's survey won't make the RBNZ any more inclined to raise interest rates," Delbruck said.

Overall, the current employment conditions improved to 88.8 from 84.3 and the employment expectations index improved to 114.5 from 111.6.