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NZ employee sentiment less negative in Q2 - survey
Reuters - Wednesday, July 1
WELLINGTON, July 1 - New Zealand workers' confidence bounced off a record low in the second quarter but remained negative amid a deep recession and rising unemployment, a survey showed on Wednesday.
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The Westpac-McDermott Miller employee confidence index rose to 96.1 from 93.2 in the previous quarter, which was the lowest since the survey began in 2004.
A reading below 100 indicates pessimists outnumber optimists.
"The present fragile employment situation continues to weigh heavily on confidence," said Westpac senior economist Donna Purdue.
The survey's current employment conditions sub-index sank to a record low, with respondents saying jobs were more difficult to find and they expected wage growth to slow further.
Purdue said she expected employment to have contracted by 1 percent in the second quarter and for annual wage growth to fall to 2.8 percent in the year to June 30.
New Zealand's unemployment rate has grown over the past two quarters to hit a six-year high of 5 percent in the March quarter, and the central bank and the Treasury are both forecasting it to rise to more than 7 percent in 2010.
However, Purdue said the survey also showed workers were looking past the current downturn and expected an improvement in the year ahead.
"Employees were also a little more upbeat about their pay outlook, and job security has improved for the first time since September 2007," she said, adding that that optimism might translate into more consumer activity next year.
She said the Reserve Bank of NZ would likely end its easing bias in the near future amid more indications of improved activity, but interest rates were likely to stay unchanged until the end of 2010 or early 2011.
"A good deal of spare capacity has built up in the NZ economy after the prolonged recession, and our employment confidence survey shows that this continues to be the case for the labour market. The RBNZ therefore still has plenty of time on its side.
The employment confidence survey of about 1,500 households is the third in two weeks to point to improving sentiment and an emergence from recession by the end of the year.
A Westpac-McDermott Miller report last week showed consumers were at their most confident in 18 months [ID:nWEL360121], and on Tuesday, the National Bank of NZ's monthly survey of business confidence showed sentiment rising for a fourth consecutive month in June [ID:nWEL477166].
The economy has been in recession since the start of 2008 and is not expected to show growth until the end of the year.
The RBNZ last month paused its near-year long run of rate cuts, which saw interest rates slashed to a record low 2.5 percent, from a high of 8.25 percent last July, to stimulate the ailing economy.
A Reuters poll showed 14 of 16 analysts expect the RBNZ to hold its cash rate at the current level at its July 30 review.
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