Low jobless rate makes employers work hard for staff

The jobless rate was probably near a record low in the fourth quarter, maintaining a shortage of workers that is putting pressure on employers to pay more to hire and retain staff, economists believe.

The jobless rate probably rose to 3.5 per cent from 3.4 per cent in the three months ended September 30, says a median forecast of 12 economists.

Official jobless data will be released on Thursday.

They said the jobless rate, the lowest of 27 economies in the OECD, probably helped wages rise at record pace last year, fuelling consumer spending and increased costs for businesses.

"Wages are rising in excess of what is justified by worker productivity and that's an outright cost to the bottom line," said Bank of New Zealand senior economist Craig Ebert.

"An unemployment rate of 3.4 per cent is overcooked and is not sustainable."

Wages for non-government workers, excluding overtime, probably rose 2.8 per cent in the fourth quarter from a year earlier.

"Wage inflation works with a lag and is going to stay high," said Ebert. "It's hard to get too bearish about the outlook for spending growth."

Probably 4000 jobs were added in the fourth quarter, the forecast says.

That's a growth rate of 0.2 per cent after a 1.3 per cent surge in the third quarter. From a year earlier, employment probably rose 2.1 per cent.

In the fourth quarter, more companies expected to fire workers than hire them for the first time in five years, a New Zealand Institute of Economic Research survey says.

More than a third of companies said it was harder to find skilled workers.

- BLOOMBERG