WELLINGTON, Nov 3 (Reuters) - New Zealand wage costs rose at a record pace in the third quarter, but employment eased as the recession started to be felt keeping on track expectations the central bank will cut interest rates further.
The key private sector labour cost index (LCI) rose 1.1 percent on during the July-September period, compared with economists' forecasts of a 0.8 percent rise in a Reuters poll, and a 0.7 percent rise in the previous quarter.
'The third quarter was probably the peak for both labour costs and inflation and, with the country clearly in recession, it won't stop them from cutting rates further,' said Su-Lin Ong, senior economist at RBC Capital Markets.
Both the New Zealand dollar and debt were unchanged after the data, with the kiwi last trading around $0.5849/57.
Last month, the Reserve Bank of New Zealand cut interest rates by a record one percentage point to 6.5 percent, its third reduction since July, to support an economy in recession and being buffeted by global financial turmoil.
Fourteen of 16 economists surveyed by Reuters expect the central bank to cut rates by another 50 basis points at its Dec. 4 review, with one expecting no change and another a 75 basis point cut.
At last month's rate cut RBNZ Governor Alan Bollard said labour costs were one of the key factors keeping domestic inflation 'stubbornly high', but said further easing was likely .
Statistics New Zealand (SNZ) said the annual rate of wage growth was 3.7 percent, compared with the 3.4 percent forecast by economists.
The rise in the LCI was lead by higher wages in the health, community group and local government sectors, the government agency said.
The quarterly employment survey, released at the same time, showed seasonally adjusted filled jobs fell 0.6 percent following a 1.7 percent rise in the previous quarter, while total paid hours decreased 1.5 percent, driven by plant closures and redundancies in meat and dairy industries.
'The falls in hours worked and filled jobs also point to a weak labour report on Thursday,' said Ong.
The third quarter jobs data, due on Nov. 6, is expected to show the jobless rate rising to 4.3 percent, with employment set to shrink 0.6 percent or more than 12,000 jobs, according to a Reuters poll.
A survey of businesses by the New Zealand Institute of Economic Research last month showed a net 11 percent shed staff in the September quarter, while a net 7 percent planned to cut staff over the next three months.
(Reporting by Gyles Beckford; Editing by James Thornhill) Keywords: NEWZEALAND ECONOMY/WAGES (gyles.beckford@reuters.com ; +64 4 471 4231; Reuters Messaging: gyles.beckford.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The key private sector labour cost index (LCI) rose 1.1 percent on during the July-September period, compared with economists' forecasts of a 0.8 percent rise in a Reuters poll, and a 0.7 percent rise in the previous quarter.
'The third quarter was probably the peak for both labour costs and inflation and, with the country clearly in recession, it won't stop them from cutting rates further,' said Su-Lin Ong, senior economist at RBC Capital Markets.
Both the New Zealand dollar and debt were unchanged after the data, with the kiwi last trading around $0.5849/57.
Last month, the Reserve Bank of New Zealand cut interest rates by a record one percentage point to 6.5 percent, its third reduction since July, to support an economy in recession and being buffeted by global financial turmoil.
Fourteen of 16 economists surveyed by Reuters expect the central bank to cut rates by another 50 basis points at its Dec. 4 review, with one expecting no change and another a 75 basis point cut.
At last month's rate cut RBNZ Governor Alan Bollard said labour costs were one of the key factors keeping domestic inflation 'stubbornly high', but said further easing was likely .
Statistics New Zealand (SNZ) said the annual rate of wage growth was 3.7 percent, compared with the 3.4 percent forecast by economists.
The rise in the LCI was lead by higher wages in the health, community group and local government sectors, the government agency said.
The quarterly employment survey, released at the same time, showed seasonally adjusted filled jobs fell 0.6 percent following a 1.7 percent rise in the previous quarter, while total paid hours decreased 1.5 percent, driven by plant closures and redundancies in meat and dairy industries.
'The falls in hours worked and filled jobs also point to a weak labour report on Thursday,' said Ong.
The third quarter jobs data, due on Nov. 6, is expected to show the jobless rate rising to 4.3 percent, with employment set to shrink 0.6 percent or more than 12,000 jobs, according to a Reuters poll.
A survey of businesses by the New Zealand Institute of Economic Research last month showed a net 11 percent shed staff in the September quarter, while a net 7 percent planned to cut staff over the next three months.
(Reporting by Gyles Beckford; Editing by James Thornhill) Keywords: NEWZEALAND ECONOMY/WAGES (gyles.beckford@reuters.com ; +64 4 471 4231; Reuters Messaging: gyles.beckford.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.