Low unemployment and a strong labour market have lifted worker confidence to the highest level in more than a decade.
Unemployment fell to 3.9 percent in the three months ended September, the lowest since mid-2008. Photo: flickr - Scott Lewis
The Westpac McDermott-Miller employment confidence index rose nearly 7 points to 121.3 in the three months ended December to the highest point since March 2008.
The rebound from a dip in the previous quarter reflected worker confidence about holding on to their jobs or finding new ones.
"Demand for workers has remained strong, and the official unemployment rate has fallen to its lowest in more than a decade," Westpac chief economist Dominick Stephens said.
Unemployment fell to 3.9 percent in the three months ended September, the lowest since mid-2008.
The recovery was led by strong pick up in confidence in Auckland and Waikato, which had slumped in the previous quarter.
The Institute of Economic Research's latest business confidence showed firms hiring more staff at the end of last year and expecting to keep doing so in the new year, although they continued to struggle to find suitably qualified staff. However, firms also reported being unable to recover higher costs.
However, the strength of the labour market has not shown through in rising wages.
More workers reported getting a pay rise in the past quarter but fewer expected to get one in the coming year.
"With the increasing difficulty of finding good workers, and with inflation no longer at rock-bottom levels, we think it's only a matter of time before employers bite the bullet and offer bigger pay increases to attract and retain workers," Mr Stephens said.