Third-quarter labour market data is expected to show ongoing wage pressures, increasing the risk of another hike in the Reserve Bank's official cash rate.

Stats NZ data for the three months that ended September was expected to be largely in line with the Reserve Bank's expectations - with an annual unemployment rate slightly higher than its forecast of 3.8 per cent. Read more here

ASB and ANZ banks say employment levels were also expected to remain slightly above their sustainable level, with wage growth yet to wash through the economy.

Private sector wage growth was expected to slightly beat the central bank's forecast of a 4.1 per cent annual increase in the Labour Cost Index.

ANZ Bank says ongoing wage pressure could see the Reserve Bank hike the Official Cash Rate (OCR) one more time in the new year, by 25 basis points, to 5.75 per cent from 5.5 per cent.

The labour market was changing, which would make it tough for households already struggling with rising costs, says ANZ senior economist Henry Russell.

"The unemployment rate is going to continue to rise, and we do expect it to lift to over 5 per cent in 2025, and that's absolutely going to be a challenge for many households."

"Many are already doing it very tough but there is unfortunately a cost to getting inflation down. And the sooner we can do that the better."

ASB also says the Reserve Bank would be wary of the risk of ongoing strong labour costs, but did not think it would be enough of a concern to hike interest rates.

A stronger-than-expected rebound in migration was expected to ease labour market shortages, along with wage pressures, says ASB senior economist Mark Smith.

"Really the key dynamic that is creating more slack in the labour market has been very strong growth in the labour force. Now we expect that to continue and for growing slack to appear in the labour market over the course of the next 12 months. Those factors will be driving inflation towards 3 per cent or lower,"

The third quarter labour market data will be released on Wednesday, November 1.

-RNZ