The official unemployment rate for the March quarter has stuck firm, unchanged at 3.4 per cent.

In the March 2023 quarter, the labour force participation rate increased to 72 per cent and the employment rate increased to 69.5 per cent.

Both are the highest rates recorded since the household labour force survey began in 1986.

Employment and the working-age population increased by 23,000 in the March 2023 quarter, Stats NZ said.

Women led the way. In the March 2023 quarter, the seasonally adjusted labour force participation rate for women increased to 67.7 per cent – the highest rate since the series began in 1986.

“Where men’s labour force participation rates have remained fairly stable, women’s rates have been steadily increasing over the last 30 years, narrowing the gap in engagement between men and women in New Zealand’s workforce,” StatsNZ said.

Meanwhile, wages continued to rise.

In the year to the March 2023 quarter, all salary and wage rates (including overtime) as measured by the labour cost index, increased 4.3 per cent, compared with 4.1 per cent in the year to the December 2022 quarter.

Average total weekly earnings (including overtime) per full-time equivalent employee, as measured by the Quarterly Employment Survey (QES), rose 7.1 per cent in the year to the March 2023 quarter.

Average ordinary time hourly earnings in the QES rose 7.6 per cent in the year to the March 2023 quarter.

Labour market data for the first quarter was released at 10.45 - including fresh numbers for the unemployment rate and wage growth.

Reading the tea leaves, economists largely got it right - picking the labour market would stay tight with little change from the previous rate of 3.4 per cent.

Westpac and Kiwibank picked no change at all, ASB predicted a slight bump to 3.5 per cent and ANZ picked a dip to 3.3 per cent.

Regardless of where the final number landed, “the labour market remains tight as a drum,” said Kiwibank chief economist Jarrod Kerr.

Meanwhile, wage growth would likely continue to lift as labour demand remains strong, and employees sought pay rises in a cost of living crisis, he said.

Kiwibank expects the annual wage bill will hit a new survey high of 4.6 per cent.

Wage growth tended to be the most lagging element of the economic cycle, said Westpac senior economist Michael Gordon.

“With that in mind, we think that the current upturn in wage growth has further to go, even with consumer price inflation now clearly past its peak.

Westpac expects a 1.1 per cent rise in the Labour Cost Index (LCI) for the March quarter, which would take the annual growth rate to a record high of 4.4 per cent.

There is a broad consensus that we are headed toward an unemployment peak of about 5.5 per cent as the economy slows.

Compounding the forecasts for this quarter, on two fronts, is the ongoing fallout from the Auckland flooding and Cyclone Gabrielle.

The weather events add a layer of complexity to the economy through the immediate financial damage they caused - literally wiping out businesses and jobs - as well as adding to labour shortages in the construction sector as the rebuilding gets underway.