File photo. Photo: 123RF
Unemployment is holding close to record lows as slack in the market reduces, while wages have risen strongly.
Stats NZ said unemployment for three months ended September was unchanged at 3.3 percent, slightly above expectations.
However, the underutilisation rate, which measured slack in the labour market, fell to 9 percent, while the economy added 35,000 jobs over the quarter.
"Unemployment and underutilisation rates have been sitting at or near record lows for more than a year," Stats NZ senior manager Becky Collett said.
The participation rate which measures the proportion of working age people in the workforce also rose to a record level while more young people and women were in work.
Jarrod Kerr. Photo: Supplied / Gino Demeer
The real strength in the data was the record level of wage growth, with the private sector labour cost index (LCI) rising at an annual rate of 3.8 percent, while average hourly earnings, which more closely matches shop floor increases was up 7.4 percent in the September year.
Kiwibank chief economist Jarrod Kerr said the data showed a "drum tight" labour market.
"The difficulty in finding the right staff, at a reasonable cost, is the biggest constraint for many Kiwi businesses."
Kerr said that meant higher interest rates.
"Today's report supports the RBNZ needs to deliver further rate rises ... the market is factoring in a 5 percent RBNZ cash rate with a 75 basis points hike to 4.25 percent probable in November.
"We are wary that too much central bank tightening may cause an economic accident, both here and offshore."
