WELLINGTON: New Zealand wages grew modestly in the September quarter as the jobs market remained mostly flat, offering few inflation worries for a central bank seen holding rates until well into next year.
The labour cost index (LCI) of private wages rose 0.5 percent in the third quarter, below market and Reserve Bank of NZ (RBNZ) expectations.
"There's no signs here of any high inflation expectations or high headline inflation is feeding through into wage negotiations, so they'll (RBNZ) be reasonably comforted by these numbers," said Goldman Sachs economist Philip Borkin.
Financial markets were unmoved by the data, with the New Zealand dollar steady around $0.8068, and interest rate futures unchanged.
The data followed recent slowing momentum from GDP, consumer spending and housing indicators. Business and consumer confidence have also retreated in recent months.
Annual inflation slowed to 4.6 percent in the September quarter, from a 21-year peak of 5.3 percent in the previous quarter, and will most likely return to the central bank's 1-3 percent target band this quarter.
Data last month showed the economy barely grew in the second quarter, after a robust 0.9 percent growth in the first three months.
Still, growth is expected to pick up next year, when a NZ$20 billion ($16 billion) rebuilding binge for Christchurch gathers pace, and could give inflation a boost.
The Reserve Bank of New Zealand, faced with global economic and financial uncertainty, left its key interest rates at 2.5 percent last week but reaffirming that it was ready to hike them again to fight inflation when global risks subside.
Based on overnight indexed swaps , markets have priced in no chance of a rate move in December, and 36 basis points of increases over the next 12 months.
The quarterly employment survey (QES) released at the same time showed hours worked and the number of full time equivalent jobs were flat.
The QES measure of wages, which reflects changes in the make up of the workforce, showed private sector wages rising 1.3 percent, and keeping wage pressure fairly steady.
The more closely followed jobless numbers are due on Nov. 3, and economists expect the jobless rate to decline to 6.4 percent from 6.5 percent in the second quarter, according to a Reuters poll.
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