Source: Radio New Zealand
Westpac senior economist Michael Gordon said New Zealanders still see jobs as being in short supply. 123rf
Employee confidence has improved slightly, but remains deeply pessimistic.
The Westpac-McDermott Miller Employment Confidence Index rose by 3.9 points to 93.8 in the three months ended December, its highest reading since March 2024.
A level below 100 indicates more households are pessimistic about the outlook than optimistic.
Westpac senior economist Michael Gordon said New Zealanders still see jobs as being in short supply.
“However, there was a slight improvement in the December quarter, consistent with our view that the unemployment rate has peaked at its current level of 5.3 percent,” he said.
Gordon noted the index was improving, but from very low levels. He said there was greater confidence about job security and opportunities in the year ahead, but cautioned the labour market would be one of the last parts of the economy to recover.
“There’s a growing sense that the economy has reached a turning point, although the labour market is typically one of the more lagging aspects of the economic cycle.
“For that reason, we expect only a gradual improvement in the unemployment rate over the course of 2026.”
Current and expected earnings growth remained subdued because of excess capacity in the labour market.
Gordon noted workers would have less bargaining power as inflation returned to target and cost-of-living pressures eased.
Regional variations
Results were mixed across the country, with confidence rising in seven regions and falling in four.
Gordon said confidence had weakened in dairy-intensive regions such as Northland, Waikato, Canterbury and Southland, adding that Fonterra lowering its milk price forecast may have dampened sentiment.
“The recent falls in dairy prices may be weighing on earnings expectations across these regions.”
Nelson/Marlborough/West Coast, Otago and Auckland were the most confident regions.
Wellington was the country’s least confident region, falling 3.2 points to 80.5.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
