Employment demand in New Zealand strengthening rapidly

New Zealand job ads rose 3.1 percent in August on a seasonally adjusted basis. It was the seventh consecutive monthly rise which signals a strong labour market. Job ads were 12.1 percent higher than a year ago (3-month average).

Details showed that internet job advertising lifted 2.0 percent in August (sa), while newspaper job advertising rose 22.0 percent m/m (sa). Most regions had strong growth, led by Auckland and Wellington, while Canterbury showed declines.

Strong job ads data suggested employment demand was strengthening. However, it is notable that such strong labour demand is not translating into strong wage growth, yet. Real wage growth has been modest to date but is expected to accelerate as strong labour demand forces more competition for skilled labour.

"Construction and services sectors were driving the labour market and keeping a lid on unemployment. This would suggest the unemployment rate's going to continue to trend down," said ANZ senior economist Sharon Zollner

Very strong growth in labour supply (both net migration and a high labour force participation rate) is part of the story, but the feed-through from weak headline CPI outturns will also no doubt be a factor. Real wage growth has been modest to date but is expected to accelerate as strong labour demand forces more competition for skilled labour.