The index showed the drop in confidence was much more marked among public sector workers. Photo: 123RF
Employment confidence fell in the December quarter ahead of a looming recession.
The Westpac McDermott Miller Employment Confidence Index (ECI) fell to 108.0 in the December quarter, from a post-Covid-19 high of 115.2 in the September quarter.
"The outlook for the year ahead in particular has softened in recent months," Westpac acting chief economist Michael Gordon said, adding employment was an important indicator of how the economy was tracking amid ongoing inflationary pressures.
Perceptions about future job opportunities and job security accounted for the greatest part of the decline in the December survey.
"It seems that New Zealanders are taking heed of the growing warnings about a recession this year," Gordon said, adding the labour market remained tight.
"It's still really one of the bright spots of the economy and it is not certainly not weak compared to history."
There had been a lot of poaching of workers last year, which tended to drive up wages, which in turn drove up business costs and inflation, he said.
"It sort of creates this merry-go-round that tends to drive up wages - so great if you are a worker but as a business, that just means you're doing a lot of running to stand still, and ultimately it just translates into cost that you have to pass on in terms of prices."
The shift in balance was taking the heat out of the labour market, which was key to the Reserve Bank's efforts to bring inflation pressures under control, he said.
"It does look like things are rebalancing in the jobs market," he said, adding that the reopening of the border and increase in workers was helping to take the pressure off."
McDermott Miller market research director Imogen Rendall said workers were increasingly concerned about job security.
"Confidence amongst both public sector and private sector employees has reduced this quarter, with all concerned about future job opportunities in New Zealand, together with personal job security," she said.
"The drop is much more marked amongst public sector workers, down 10.4 points this quarter to 114.0.
"In contrast, private sector workers have seen an overall drop of 5.5 points from September 2022 to 104.6."