New Zealand’s unemployment rate is forecast to have fallen in Q3, whilst a staff shortage impacts wage growth.

Economists predict the Household Labour Force Survey (HLFS) for the third quarter will reveal an unemployment rate of around 3.2%, compared to 3.3% in Q2.

"Wednesday's figures are expected to depict an extraordinarily tight labour market with employment above its maximum sustainable level," according to ASB bank senior economist Mark Smith.

"Widespread and acute worker shortages should hold the unemployment rate around record lows, with other labour utilisation metrics extremely stretched."

According to Kiwibank chief economist, Jarrod Kerr, the utilisation rate offers a wider gauge of the tightness in New Zealand’s labour market, RNZ reports.

"Those sorts of measures give us an idea of just how tight the labour market is and they're telling us that the labour market is very tight, and the outlook for wage growth is north. It looks like we're going to see wages continuing to rise," Kerr commented.

Annual wage growth is forecast to increase to 3.7%, says Kiwibank, from 3.4% in the second quarter.

Kerr went on to say that hiking wages would mean the central bank would have to increase the official cash rate (OCR) by another 75 basis points this week.

Even though some economists forecast the Reserve Bank of New Zealand to increase rates in the new year by a further 75 basis points, Kerr said this would be dependent on Q4 labour market data.

"We're picking that HLFS employment growth fell to just 0.4% from 1.6% in the June quarter. Our forecast is also down from the recent peak in employment growth of 4% a year ago.

"But I think that what the Reserve Bank would need to see is the demand and the economy coming down to meet supply, which is obviously being held back by a lack of workers and a lack of resources within the economy,” he added.