The unemployment rate has risen slightly to 3.3 percent, while wage rates have seen the largest increase since late 2008.
StatsNZ on Wednesday morning revealed the seasonally adjusted unemployment rate had increased to 3.3 percent in the June 2022 quarter from 3.2 percent in the March quarter. The underutilisation rate is 9.2 percent, down from 9.3 percent.
"Measures of spare labour market capacity have fallen over the year and remained low for several quarters, continuing to show a tight labour market," StatsNZ work and wellbeing statistics senior manager Becky Collett said.
Wage inflation, which is measured by the Labour Cost Index (LCI) which takes into account all salary and wage rates, has jumped to 3.4 percent in the June quarter, up from 3 percent in March. Average ordinary time hourly earnings rose 6.4 percent. That compares to annual inflation of 7.3 percent.
"The June quarter had the largest increase in LCI salary and wages rates since late-2008. Over the year, a steadily increasing number of wages have been raised to better match market rates, as well as attracting or retaining staff," business employment insights manager Sue Chapman said.
"Nearly two-thirds of roles surveyed in the LCI saw an increase in ordinary-time wage rates in the year ended June 2022 – the highest level since this series began in 1993."
Digging into the numbers, the unemployment rate for women was 3.5 percent in the June 2022 quarter, compared with 3.4 percent last quarter. The rate for men stayed at 3.1 percent.
"Underutilisation and unemployment rates have fallen over the year for Māori, Pacific, and Asian ethnic groups, as well as young people," Collett said.
The lift in the unemployment rate wasn't picked by most economists, who expected it to fall slightly to around 3 percent.
Infometrics economist Brad Olsen told AM Early on Wednesday morning that there are pros and cons to a low unemployment rate. While it means more competition and options for workers, leading to wage growth, it means businesses can struggle to grow and deal with workload issues.
Reacting to the latest figures, ASB senior economist Mark Smith said while unemployment is slightly up, it's clear "the labour market still looks extremely tight".
"The distributional figures showed a broadening front of wage increases, pointing to a wage-price spiral unfolding," Smith said.
"Despite softening signs on the outlook for economic activity, we expect the labour market to remain tight and the unemployment rate to remain close to record lows over the 2nd half of 2022 and into 2023."
He said high inflation appears to be "increasingly entrenched and domestically driven and this necessitates forceful action and tough talk by the RBNZ to ensure future inflation outcomes align with the 1-3 percent inflation target".
