Last week’s data was a mixed bag, with weak labour data confirming how tough times have been, but some encouraging signs on commodity prices. The focus this week is on the consumer, with data on spending and housing. Both should continue to tell a story of gradual recovery.
Tuesday’s Labour Cost Index (LCI) Q2 wage data came in weaker than expected, with private sector all salary and wage rates increasing just 0.3% in the quarter.
Rising unemployment and lower inflation are now clearly taking their toll on remuneration. Annual wage growth slowed to 2.7%, the weakest pace since June 2005, and we expect it to slow even more going forward, to 1.8% by March 2010.
Quarterly Employment Survey (QES) total paid hours fell 1.2% in the quarter (seasonally adjusted), posing some downside risk to our Q2 GDP forecast of -0.4%. But more importantly, the fall in paid hours combined with fewer jobs mean that seasonally adjusted gross earnings declined by 0.5%, the first quarterly contraction since June 1999 and the lowest annual growth (1.0%) since 1992. Little wonder consumers are hurting.
Quarterly Employment Survey (QES) total paid hours fell 1.2% in the quarter (seasonally adjusted), posing some downside risk to our Q2 GDP forecast of -0.4%. But more importantly, the fall in paid hours combined with fewer jobs mean that seasonally adjusted gross earnings declined by 0.5%, the first quarterly contraction since June 1999 and the lowest annual growth (1.0%) since 1992. Little wonder consumers are hurting.
The Household Labour Force Survey on Thursday confirmed that New Zealand’s labour market downturn is becoming more severe. The unemployment rate jumped the most in a single quarter since 1988, from 5.0% to 6.0%. Previously, unemployment was rising only modestly because of a long-standing labour shortage. But many vacancies have now been filled and workers are more likely to hit dole queues when they are laid off (or leave school).
