Jobs market growth takes a hit
The first signs are emerging that coronavirus fears are starting to have a measurable impact on the jobs market.
Seek New Zealand general manager Janet Faulding said vacancies advertised on its online jobs market rose 0.6 per cent last month, after a 1.6 per cent rise in January.
Infometrics economist Brad Olsen described the February figure as ‘‘relatively soft’’.
Faulding said the lower growth in job ads could be due to the uncertainty surrounding the coronavirus.
Seek is not due to report its full data for February until Wednesday, but Faulding said it expected short-term growth to be ‘‘challenging’’.
Sectors such as hospitality and tourism, agriculture, forestry and fishing, retailing and higher education were all exposed, she said.
Trade Me Jobs head Jeremy Wade said it was too soon for the coronavirus to be having a noticeable impact on its jobs market.
‘‘But if the virus continues to spread in New Zealand we expect to see small businesses and sectors like hospitality and tourism delay hiring until they have greater certainty,’’ he said.
Hospitality NZ chief executive Julie White said her members were looking ‘‘right now’’ at reducing their opening hours and staffing levels as cash flows fell.
‘‘The first thing they can control is their staffing costs so they are looking at reducing the number of people employed.’’
There were fewer tourists, but also fewer Kiwi diners and when they did go out they were spending less, White said.
‘‘What is really concerning is the regions.
‘‘Members in Omaru have said their bookings in March and April have dropped off significantly. That is really alarming.’’
Hospitality NZ expected it would have a fuller picture when it completed a survey on Thursday, but White said it was hoping for at least an indication of the support that might be on offer from the Government within the next four weeks.
‘‘We are quite a resilient industry. We will recover. However, we need a bit of assistance from the
Government,’’ she said.
Wage subsidies to help hospitality businesses keep people employed would be really beneficial, she said.
Delaying the minium wage rise scheduled for April 1 would also help, she said.
Retail NZ has also been surveying its members, and policy manager Greg Harford said it was hearing ‘‘quite a lot of doom and gloom’’.
‘‘A large number of retailers are reporting drops in sales, and some of those are quite large.
‘‘Quite a few business have reduced staff hours and are planning to reduce that further. There is a lot of uncertainty.’’
The downturn had spread beyond retailers who depended on tourism, with Kiwi shoppers also cutting back on discretionary spending as confidence in the economic outlook weakened, Harford said.
‘‘Customers appear pretty reluctant to get out into the shops.
‘‘There has not been huge appetite for spending, particularly in the fashion space.’’
It was hard to compare the impact of the virus with 9/11 or the GFC but it was certainly much worse than the Sars outbreak in 2003, he said.
Harford suggested the
Government could consider cancelling the minimum wage increase to prevent a further cycle of retailers reducing staff hours.
‘‘It would be really good to see some economic stimulus come through.
‘‘That could happened through a tax cut or a rebate for small businesses, or a cut in GST potentially.
‘‘We really do think the Government has got to be looking at a package for businesses and we will be getting in touch to put that case through in a while,’’ he said.
Infometrics’ Olsen said a lot of businesses appeared unsure where things were heading and what the response of the Government might be.
‘‘The big trigger point in New Zealand in terms of how our economy responds is going to be based around job numbers.
‘‘If we see actual job losses and people being left without work, that is when we are going to see the crunch come in from an economic point of view.’’
Deciding how and whether to target a policy response could become more complicated as the financial impact of the virus spread from specific sectors and regions and into the wider economy, he agreed.
‘‘That is clouding the picture a bit.’’
But it would be useful to understand more from the Government ‘‘a lot quicker’’ what might be on the table, he said.
Finance Minister Grant
Robertson had signalled wage subsidies for employers similar to those offered to some businesses after the Christchurch and Kaiko¯ ura earthquakes could be considered, but had also made it clear it was a different situation, he said.
‘‘An earthquake is a one-off, whereas this situation is still evolving,’’ Olsen said.
A tax rebate or cash payment to households might provide an effective short-term stimulus, he said.
‘‘What we are seeing at the moment is this rise in contagions internationally,’’ Olsen said.
‘‘Some of the growth areas in South Korea and Italy, and burgeoning ones coming through from the US and UK, start to sound more alarm bells over what that could mean for our wider trade networks.’’
Uncertainties remain both over how many people could be exposed to the virus and what the death rate might be.
The Spanish flu pandemic, which provides one benchmark for a ‘‘worst case scenario’’, is believed to have infected just over a quarter of the world’s population during its outbreaks in 1918 and 1919.
But Otago University epidemiologist Professor Michael Baker said on Saturday that the coronavirus appeared ‘‘more controllable’’.
Early data suggested the coronavirus could be on a trajectory to infect as much as 40 per cent of the world’s population over two years, without effective controls, he said.
But Baker said there was now ‘‘a little bit of cause for optimism’’ from the characteristics of transmission, which was often within families, and from the experience in China that containment might be more possible.
The World Health Organisation said last week that the proportion of people diagnosed with the disease who had died was 3.4 per cent.
But Baker agreed with the assessment of Britain’s chief medical officer Professor Chris
Whitty that the death rate was likely to be less than 1 per cent, taking into account the number of undiagnosed ‘‘mild’’ cases.
Breccan Mcleodlundy, co-chair of technology industry body Nzrise, said New Zealand technology exporters were cautious but not running for the hills just yet.
Some customers had started putting clauses into contracts that allowed them to ‘‘get out of things if they need to’’, he said.
‘‘At the same time we are all getting more aware that insurance may not cover things such as travel to conferences.’’
James Brown, chief executive of Fintech NZ, which represents financial technology firms, said its members were also waking up to the economic threat posed by the virus.
Some might need Government help to ride out the storm, Brown said.
‘‘People will be wondering what the Government provision is for companies that were in the middle of launching in a new market but have had to put that on hold after spending millions of dollars.’’
Colin Mckinnon, executive director of the Private Capital Association, speaking from a venture capital conference in Sydney, indicated the mood in that industry appeared relatively phlegmatic.
The coronavirus might delay some merger and acquisitions activity and ‘‘everybody is acknowledging it and thinking about what the impact might be’’, he said.
But there was general awareness that the last downturn during the GFC had been followed by good deals for investors, and the industry had long investment cycles, he said.
‘‘Venture capital got knocked around in 2007-08 but it was for whole lot of reasons other than [just] the GFC.
‘‘The people who have been around a long time have said we have been through this before. Generally they are neutral about even a recession.’’