WELLINGTON: New Zealand's wage growth remained placid in the December quarter as the jobs market showed some signs of growth, posing no inflation worries and leaving the central bank plenty of leeway to keep rates at a record low.
The labour cost index (LCI) of private sector wages rose 0.7 percent on the previous quarter, according to official data on Tuesday. A Reuters poll forecast a quarterly rise of 0.5 percent.
Separately, the quarterly employment survey (QES) showed private sector wages flat on the previous quarter, compared with 0.5 percent rise in the poll.
"The annual pace of wage inflation was pretty subdued and of no urgent concern for the Reserve Bank of New Zealand, it does suggest the underlying inflation pressures remain very contained," said ASB Bank economist Jane Turner.
Financial markets were unmoved by the data, with the New Zealand dollar steady around $0.8335/40, and interest rate futures unchanged.
Recent data have shown benign price pressures, with the consumer price index falling 0.3 percent in the December quarter, the first decline in two years, pulling annual inflation down to 1.8 percent and staying safely in the central bank's 1-3 percent target band.
The economy grew 0.8 percent in the September quarter from 0.1 percent in the June quarter, helped by the Rugby World Cup in the country, and unlikely to sustain.
Retail spending, building activity and business confidence all weakened going into the New Year, but there were signs of a stabilising housing market and strong dairy prices.
The Reserve Bank of New Zealand last month held interest rates at 2.5 percent for a seventh time because of uncertain global outlook and modest domestic demand, and indicated that rates may stay there this year.
The quarterly employment survey (QES) released at the same time showed more hours worked, a rise in the number of filled jobs, and modest growth in full time equivalent jobs.
The QES measure of wages, which reflects changes in the make up of the workforce, showed flat private sector wages, keeping wage pressure fairly steady.
The more authoritative employment numbers are due on Feb. 9, and economists expect the jobless rate to ease to 6.5 percent from 6.6 percent in the third quarter, according to a Reuters poll.
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