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Future big spending may be short-lived THERE are plenty of jobs around and wages are up, which should give a boost to consumer spending that will likely be short-lived, according to a Westpac Bank survey."Employees are continuing to bask in the strong job market," Westpac economist Donna Purdue said. The Westpac McDermott Miller Employment Confidence Index shows employment confidence improving in the September quarter, for the first time in two years. The index rose from 123.7 points in the June quarter to 126.7 points in the September quarter. An index above 100 indicates more optimists than pessimists. The index shows the level of job security and wage expectations, and so gives an indication of a willingness to spend. New Zealand has one of the lowest unemployment rates in the industrialised world at 3.6 per cent, and wages are rising. Statistics New Zealand figures showed labour costs rose 3.7 per cent in the June year, the biggest annual increase for 14 years. Salary and wage rates rose 3.2 per cent. The Westpac survey showed a net 35 per cent of workers earning more than a year ago. With plenty of jobs, and wages up on a year ago, consumer spending may get a boost in the next few months, Westpac said, even though the economy is cooling down. In the June year, the economy grew 1.9 per cent, according to figures out last week, down from 3.1 per cent the year before. The figures also showed household spending fell 0.5 per cent in the June quarter, even though the housing market has held up and the job market has been strong. Household budgets were vulnerable, so people were spending slightly less, Ms Purdue said. Nationally, any spending boost from greater confidence about jobs would be short-lived because of a low saving rate, a high level of household debt and higher mortgage rates compared with a couple of years ago. Wellington workers are more confident than workers in other main centres, with an index of 130 points, up about two points. That reflected higher job confidence among public sector workers than private sector workers. The public service has grown strongly since 1999 and was likely to expand even more, according to McDermott Miller managing director Richard Miller. Nationally, workers were less confident about jobs and wages a year from now. The job "expectations" index was 116 points, up slightly on the June quarter, but still below the average of 119 points. Jobs were expected to be harder to find in future and fewer thought they would earn more in 12 months than now. Westpac expected demand for workers to slow next year, with job growth dropping from 3 per cent to 0.5 per cent by the end of next year. |
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