Cost pressures mounting under labour market tightness

The NZIER’s Quarterly Survey of Business Opinion showed that capacity pressures are becoming more of a constraint, and could start to become a key driver of price increases throughout the economy.  These pressures reflect the strength of the economy and a favourable labour market for workers.  Businesses are finding it difficult to hire enough skilled and unskilled personnel, and labour turnover indicators are ramping up – suggesting that in-house staff are negotiating and finding better contracts elsewhere.  As a result, we expect to see further increases in employment and upward pressure on labour costs emerge in the December quarter labour market data out next week.