Business NSW regional manager, Joe Townsend, said wage growth is set to increase, but that will likely also cause inflation on top of the higher cost of living that people are already seeing.

Mr Townsend said it can often be a difficult cycle to break out of.

"I think this year we're actually going to see a rather steep increase in wages, there's currently talk of 3.5 to 4 per cent wage increase, but there is that cost of living aspect at the moment," he said.

"It's just going to be a matter of how businesses can afford to stand up to cost increases, when they're also experiencing these cost increases such as transportation costs, and product costs.

"So that will eventually flow back into the cost to the community, and we might not necessarily see the biggest reward with the wage growth."

One positive the government was able to cling onto on Tuesday night was the low unemployment rate, which nationally sits at just 4.2 per cent.

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That figure is higher in the New England North West, sitting at 4.8 per cent based off February's figures, which is up from the previous month.

The participation rate - which represents the number of people employed, or looking for work - was down, along with the employed persons ratio.

That's a combination that doesn't sit well with Mr Townsend.

"That's not ideal at all to see that start happening, because what we had been seeing was participation rate increase and unemployment rates staying stable, which meant more people were coming into the work force," he said.

"We might be a bit slower here in the New England North West because we had a pretty steep decline in December and January due to the Omicron variant, and that could be still be reflected in these February figures."

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