ASB and Employment Hero data signal tighter borrowing capacity and serviceability pressure for mortgage customers
Employment growth in New Zealand is holding up even as wage gains stall, with new data from ASB and Employment Hero pointing to a labour market that is expanding in headcount but not in real spending power.
ASB’s latest filled jobs report shows employment rising 0.3% in February, leaving job numbers flat over the year at around 2.35 million, and still just under 2% below late‑2023 peaks.
Wesley Tanuvasa, ASB economist, said the figures “maintained signs of a stabilising labour market”, with services employment leading modest gains even as goods production and construction remain below last year’s levels.
However, ASB warns the US–Israel war on Iran poses “material” risks to growth and inflation, with higher energy costs and weaker confidence expected to delay a full labour market recovery and keep unemployment higher than otherwise through 2026.
Westpac’s latest Employment Confidence Index, compiled with McDermott Miller, has edged up 1.8 points to 95.6 – the highest since early 2024 – but still sits below the 100 mark that separates pessimists from optimists, underscoring how fragile sentiment remains.
Wages stall as casual work, and regional gaps grow
A separate lens from Employment Hero’s February Jobs Report paints a similar picture of resilience in job numbers, but weakness in pay. Average wage growth has fallen from 5.6% year‑on‑year a year ago to just 0.2% now, well below inflation near 3%.
“Wages have well and truly stalled for Kiwis,” said Neil Webster, Employment Hero’s New Zealand general manager, adding that this “represents a real-time loss for Kiwi workers”.
Westpac’s survey results also point to subdued earnings, with a net 14% of households reporting pay rises over the past year, and a net 22% expecting increases in the year ahead – both low by historical standards and consistent with wage growth moderating into the 2%–3% range for many workers.
Jobs are still being created, with Employment Hero’s data showing employment up 6.7% over the year across more than 10,000 businesses, led by Canterbury and Auckland. Casual roles are driving much of that growth, rising 21.7% year‑on‑year, which Webster links to businesses staying cautious about taking on permanent staff in an uncertain economic environment.
Regional and sector gaps are widening. Wellington continues to struggle, with employment down 1.5% and wages falling 4.6% year‑on‑year, while Christchurch is the only major centre where pay is keeping pace with inflation, up 3.2%.
Retail, hospitality and tourism, and manufacturing, transport and logistics, are leading both hiring and wage growth, while science and technology, and parts of healthcare are going backwards.
Implications for mortgage rates, and serviceability
The combination of flat real wages, rising living costs, and only modest job growth means more borrowers may meet employment criteria but still face tight serviceability tests, and constrained borrowing capacity.
ASB expects higher energy costs linked to the Middle East conflict to keep inflation elevated for longer, even as “excess labour market slack” helps contain wage inflation and reduces the risk of a price–wage spiral that would force the Reserve Bank into more aggressive hikes.
Against that backdrop, income stability, repayment buffers at higher mortgage rates, and realistic expectations on property type and location are likely to remain front of mind for households over the coming year.
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