Employment Confidence Up In March, But Past Its Peak

Westpac McDermott Miller Employment Confidence, March quarter 2023

The Westpac McDermott Miller Employment Confidence Index (ECI) rose by 1.5 points to 109.5 in the March quarter. The Index remains below the recent peak of 115.2 that was reached in the September 2022 quarter.

“In contrast to the sharp drop in consumer confidence over the last year, people’s feelings about the jobs market remain firmly on the positive side,” said Westpac Senior Economist Michael Gordon.

However, there are signs that the labour market, while still running hot, has passed its peak. “Perceptions about current job opportunities fell for the second time in a row,” noted Mr Gordon. “This is consistent with our view that we’ll see a further rise in unemployment in coming quarters, albeit not a very rapid one.”

Past and expected earnings growth rose in the March quarter, but both measures remain well below their long-run averages. “While average pay rates are rising faster than they have in decades, that’s only been enough to match inflation – few households will feel like they’re getting ahead,” noted Mr Gordon.

“Confidence amongst employees working in the public sector has dropped back to the level last seen in June 2022, down 4.3 points this quarter to 109.7,” observed Imogen Rendall, Market Research Director of McDermott Miller Limited. “In contrast, private sector employees have seen a small rise in confidence from last quarter (108.2, an increase of 3.6 points from December 2022).”

“Where some divergence of views is usually the case, this quarter both public sector and private sector employees are closely aligned in their assessment of current employment conditions as well as expectations for the future,” commented Ms Rendall.

A full description of the background and specifications of the survey are attached. The survey was conducted over 1-14 March 2023, with a sample size of 1,559. An index number over 100 indicates that optimists outnumber pessimists. The margin of error of the survey is 2.5%.

Acknowledgement

The Westpac McDermott Miller Employment Confidence Index is owned by McDermott Miller Limited. Westpac McDermott Miller should be acknowledged as the source when citing the Employment Confidence Survey and Index. Graphs supplied may be reproduced by the news media provided the Westpac McDermott Miller logo remains inset.

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