Hiring expectations have dipped slightly for the second consecutive quarter, down 3.5 percentage points (pp), according to the latest Hudson Report: Employment Trends.

The drop indicates a slower-than-expected start to the year in terms of hiring given strengthening business confidence and robust economic growth.

Nearly two-thirds (64.6%) of the more than 1,000 employers surveyed say they intend to keep staffing levels steady this quarter, representing a 4.3pp increase, while positive hiring intentions remain relatively stable at 27.3% and, Hudson says, reflects caution in the market.

“The 2014 year started gangbusters with economic indicators almost universally promising renewed and strengthening growth," says Roman Rogers, Executive General Manager, Hudson New Zealand.

"But while the market is undoubtedly feeling confident, it hasn’t translated into the aggressive hiring activity that was predicted.

“Employers are also facing the dual pressures of needing to reward and energise existing staff seeking higher pay, with the ongoing mandate to limit cost increases.

“Where rewarding all staff is not immediately possible, we recommend being very clear on what the next steps are for employees and what they can do in order to reach their salary goals.

"Organisations might also consider putting in place intermediary periods whereby KPI-driven performance-based salary increases may be introduced on July 1 or October 1, as these performance targets are met.”

Hiring intentions in the South Island, while remaining the strongest across the regions, have dropped a significant 10.3pp with 38.7% of employers intending to increase headcount, in the lowest result since Q2 2011.

“This drop in hiring intentions is, in part, linked to the lack of speed around the execution of the Canterbury re-build, as well as the continued adjustment of the market’s expectations around actual hiring requirements,” Rogers adds.

Construction and commercial roles remain in demand in Canterbury, including project managers, quantity surveyors and estimators, and there is also increased demand from manufacturing companies who are supplying products to the re-build.

Construction and investment in professional services[2] are driving the economy in Auckland and the wider region. Building consents for 2013 are at their highest levels since 2008[3] and intentions to keep headcount steady are up 6.9pp to 69.1% in Upper North Island.

Intentions to increase headcount in Wellington increased a marginal 0.4pp. With the Government Financial Year ending on June 30 and the General Election in September, little growth in hiring is expected in the coming two quarters.

Despite the slower than expected start to 2014, Information Technology (43.4%) remains one of the industries with the highest positive hiring intentions in New Zealand.

Contractor hiring expectations are also up across the board with intention to hire Office Support contractors up a significant 10.5pp this quarter, followed by contractors in Financial Services and Sales, Marketing & Communications, up by 7.3pp and 3.1pp respectively.

“Contracting is on the rise, with companies seeking to grow by using contractors more extensively than before," Rogers adds. "And, people are more open to taking on contracting roles than they had been previously.

“While employees in this market have usually been risk-averse, their worries have been alleviated by evidence of the more positive economy.

"They view contracting as more lucrative than permanent work, see an opportunity to gain flexibility around work / life balance and are keen to experience more interesting project work that they might otherwise get.”