Te Whanganui a Tara – Aotearoa is rapidly approaching full employment, the ANZ bank says in its latest economic update.
The bank says New Zealand employers appear increasingly willing to take a punt on anyone they can get, and the rise in monthly filled jobs suggests employment growth will be higher than they we previously thought.
Accordingly, they have upgraded their near-term employment growth outlook, and brought forward the profile of employment growth over the next few years.
Previously they expected that firms would struggle to fill vacancies due to various matching issues in the labour market, such as skills shortages or people simply being in the wrong regions compared to where the jobs are, given how distorted the economy is currently.
However, this now looks to be less of an issue in terms of job creation. Employers appear increasingly willing to take a punt on anyone they can get, and the rise in monthly filled jobs suggests employment growth will be higher than the bank previously thought.
ANZ still expects employment growth to slow in the latter half of their forecast as OCR hikes start to take some of the momentum out of the economy, and a tight labour market makes finding workers increasingly difficult.
The bank raised its labour market forecasts, made in early May, to account for recent positive economic news, robust monthly jobs numbers, record high job vacancies, other survey and anecdotal evidence.
A more rapid decline in the unemployment rate reflects a stronger outlook for employment growth, and a more advanced economic recovery in general.
With the labour market tightening and inflation rising, ANZ anticipates a sizeable increase in wage inflation over the coming few years.