Confidence in the labour market has fallen for the first time in two years.
Photo: 123rf
The Westpac McDermott Miller Employment Confidence index shows sentiment fell 5 points in the June quarter to 108.5. A reading above 100 indicates optimism, while anything below suggests pessimism.
Respondents remained optimistic about current job opportunities, reflecting the record number of vacancies that are being advertised.
However, perceptions of job security fell sharply and expectations for future earnings growth also softened.
Westpac acting chief economist Michael Gordon said overall confidence had held up reasonably well.
"That's in stark contrast with the consumer confidence results released earlier this week, which fell to the lowest in the history of the survey going back to 1988.
"Taking these results together suggests that while the risk of recession is playing on some people's minds, it's the cost-of-living squeeze that is doing the most damage to confidence."
Official statistics have shown a broad lift in wage growth in the past year, but the survey indicates that wages had not kept pace with the rising cost of living.
The fall in headline employment confidence was not consistent across the regions.
"Gisborne/Hawke's Bay and Wellington rebounded after an unusual drop in the previous quarter, while Auckland and Southland gave back their previous large gains."
Otago was the only region that sustained a rise in confidence over the last couple of quarters, which could be linked to parts of the region, namely Queenstown, gearing up for the return of overseas tourists.
McDermott Miller market research director Imogen Rendall said confidence among public sector employees had dropped considerably, falling nearly 18 points to 110.3.
Meanwhile, sentiment amongst private sectors was largely unchanged over the June quarter at 106.4.
"Both private and public sector employees are concerned about future job opportunities, while public sector employees are now much more cautious about their personal job security over the coming year compared with last quarter's results," Rendall said in a statement.
"When looking across the different demographic groups, some big drops in confidence have been seen amongst men (down 11.2 points to 108.9) and amongst those aged 30 to 49 years (down 10.5 points to 105.6).
"Although both groups remain positive, they are clearly concerned about what the future holds."
The survey had a sample size of 1559 people and was conducted from 1-14 June.