KEY POINTS:
New Zealand companies probably added workers in the fourth quarter, keeping the jobless rate close to a record low and stoking wages growth, which increases the likelihood that the Reserve Bank will raise interest rates next month.
Companies added about 6000 workers in the quarter, after shedding 9000 jobs in the third quarter, according to the median forecast of nine economists surveyed by Bloomberg.
The jobless rate - to be released on Thursday - was probably unchanged at 3.8 per cent.
New Zealand's unemployment rate, the fourth-lowest of 27 OECD economies that use standardised rates, is boosting wages and consumer spending. Reserve Bank Governor Alan Bollard has said he is likely to raise borrowing costs unless he sees a cooling in domestic demand.
"There's not going to be a moderation in demand unless the labour market starts to turn," said Khoon Goh, senior economist at ANZ National Bank.
"Until people get more uncertain about their job prospects, they won't cut back on their spending."
A separate report from Statistics New Zealand today will show wages for non-government workers rose 0.7 per cent in the fourth quarter, according to the median forecast in the survey. From a year earlier, wages increased 2.9 per cent.
Ten of 13 economists surveyed by Bloomberg on January 25 expect Bollard to raise the official cash rate a quarter-point to a record 7.5 per cent when he reviews rates on March 8.
ANZ National Bank expects borrowing costs will be kept unchanged, but "strong employment growth will see us joining the chorus for a hike", Goh said.
New Zealand's labour participation rate will rise to 68.4 per cent from 68.3 per cent in the third quarter, according to the survey. Employment climbed 1.9 per cent in the fourth quarter from a year earlier, the survey showed.
"Capacity constraints in the labour market continue to remain a key issue for most employers," said Westpac economist Donna Purdue.
"We expect wage inflation to remain at an elevated level."
- BLOOMBERG
