Construction workers unload equipment at a building site for a residential apartment block in central Wellington, New Zealand
Construction workers unload equipment at a building site for a residential apartment block in central Wellington, New Zealand, July 3, 2017. Reuters

New Zealand's jobless rate held at 3.3% in the third quarter, and wage inflation hit its highest level on record, adding to expectations the central bank will increase interest rates by a historic 75 basis points at its next meeting.

Unemployment in New Zealand was sitting at 3.3% in the third quarter, while an increase in the number of people looking for work saw employment surge 1.3%, according to data released by Statistics New Zealand on Wednesday.

"The labour market remains too tight," said Kiwibank economists in a note, adding workers are putting in more hours and firms are hiring from a broader set of people.

"Firms are taking anyone that they can get."

HOT JOB MARKET

This tightness saw wage inflation hit its highest levels since the survey began in 1993 with third-quarter seasonally adjusted private sector wages up 3.8% on the previous year.

Wage inflation highlights the extent of the challenge that the RBNZ faces bringing inflation under control, Michael Gordon, acting chief economist at Westpac said in a note.

"There is no room for relenting on the path to higher interest rates yet," he said.

New Zealand inflation is running at 7.2%, far above the central bank's target of 1-3% over the medium term.

ANZ Bank said the data reinforced their expectation of a 75 basis point hike in the cash rate but does not meet the very high bar for the RBNZ to consider a move of more than that at the November meeting.

The RBNZ in October lifted interest rates to a seven-year high of 3.5% and promised more hikes to come as it struggles to cool red-hot inflation in an overstretched economy. The market is currently pricing in a 70% chance the central bank will increase the cash rate by 75bps at its next meeting.

RBNZ Deputy Governor Christian Hawkesby told a media conference the employment and wage data had come in broadly consistently with the central bank's most recent projections.

"We have a very strong, a very hot labour market. And to achieve our monetary policy objectives, we need to ensure that demand cools such that it can keep pace with the supply," said Hawkesby.