2 Feb 2015

Migration and inflation to shape job stats

6:08 am on 2 February 2015

Economists expect the December quarter labour market statistics to reflect a slight drop in the unemployment rate, continued jobs growth and strong participation in the workforce.

A Bloomberg survey indicates economists expect an unemployment rate of 5.3 percent, down slightly from 5.4 percent three months earlier.

They also expect Wednesday's figures will show private sector wages to have risen slightly, by half a percent in the three months, taking annual wage growth to 1.8 percent.

The participation rate is expected to have increased to 69.1 percent, reflecting the ongoing strength in migration to New Zealand.

Westpac economist Satish Ranchhod said New Zealand's low inflation rate was likely to be reflected in the labour market data.

"The key thing that we'll be looking for is that demand in the construction sector, which is expected to be a pretty strong support for general activity in the economy, is remaining firm," he said.

"But we'll also be looking for signs that that strong demand is starting to spread out through the economy more broadly, and signs on that front are looking pretty favourable."

Mr Ranchhod said recent business surveys had indicated hiring had started to pick up and the country had a pretty robust outlook for domestic demand over the coming year.

ASB economist Chris Tennent Brown said the labour market data was notoriously volatile, and anything could happen.

"Often we're caught out by surprises in any one of the things, the employment growth, the participation rate and the unemployment rate have all surprised us on a pretty regular basis."

However, he said the underlying pattern was expected to be of pretty strong employment growth.

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