2 Aug 2010

Economists to scrutinise new labour market figures

12:53 pm on 2 August 2010

Economists will be closely scrutinising the state of the labour market this week, after previous figures showed a sharp fall in unemployment.

The Labour Cost Index and Quarterly Employment Survey are released on Tuesday, and the Household Labour Force Survey on Thursday.

Economic figures portray a muted recovery, but the labour market has contradicted that, with unemployment plunging from 7.1% to 6% in the first three months of the year.

For the June quarter, economists are picking slow wage and employment growth, and that unemployment will edge up, though the Reserve Bank expects the jobless rate to remain flat.

BNZ senior economist Craig Ebert says if that's true the central bank will be worried there isn't much room for the economy to grow before inflation becomes a problem.

He says an unemployment rate below 5% begins to generate destabilising inflation pressures.