Small rise in unemployment expected to belie ‘brutal’ patches in jobs market
Figures due out this week should show unemployment still remains low by historical standards, but parts of the jobs market are now “brutal”, experts say.
BNZ research head Stephen Toplis says the unemployment rate may not seem in sync with people’s experiences when applying for jobs because it lags changes in the demand for labour.
“First, the economy has to slow down, then it has to slow down enough for employers to start laying off people.
“We've been in an environment where things have been tough but businesses have been holding on to workers because it’s been impossible to replace them. Now we're in an environment where they can start letting them go.”
ANZ and Westpac are forecasting that Stats NZ will report on Wednesday that the official unemployment rate rose to 4.2% in the three months to the end of March, up from 4% in the previous quarter.
The Reserve Bank also forecast in February that the rate would edge up to 4.2% in the March quarter – from its low of 3.2% a year ago – before rising at a faster pace to 5% by the end of the year.
While the movements in the official unemployment rate have been small to date, the mood swings in parts of the jobs market haven’t.
Bridget Clarke, a Wellington-based director of recruitment firm Robert Walters, describes the market she is observing as “bloody tough” and “brutal”.
“Our candidate application numbers are up and we're seeing people look overseas to Australia and to Auckland because there are very limited opportunities here in Wellington right now.”
One contractor said they had not seen the market in Wellington grind to a near halt in such a way before.
The negativity appeared reflected in a consumer confidence survey published by ANZ on Friday.
While confidence deteriorated only marginally in the month of April, ANZ senior economist Miles Workman reported that Wellington “experienced the sharpest deterioration” and was the most downbeat of the five regions it tracks.
“Wellington’s relative optimism wore off from early 2022, perhaps as it became clear that fiscal expansion couldn’t go on forever,” he said.
Toplis says not everyone seeking work is in the same boat.
BNZ and ASB are tipping the March-quarter unemployment rate will come in a little higher than the Reserve Bank or ANZ are forecasting, at 4.3%.
But both nevertheless expect the proportion of people in employment to also increase slightly, with the proportion of people not in work but who do not count as “officially unemployed” falling.
“I’d suggest it’s a different set of people losing their jobs to the people who are getting employed,” Toplis says. “Not to be facetious, a public servant who’s been working for the Ministry of Business, Innovation and Employment for 15 years is not keen to take up a barista job.”
Mark Gillard, director of NZ Careers Expo, which holds career events aimed at students in years 11 to 13, says the changing commentary on the jobs market and the pressure that tertiary education providers are under isn’t being lost on young people.
Both are adding “anxiety and stress” and persuading school-leavers to think more carefully about their options, he says.
But, for them, finding work probably isn’t much more difficult than it has ever been, Gillard says.
“If they are targeting the right industries and go in with the right attitudes, then the jobs are there. The statistics are telling us one thing, but employers are telling us they still can't find good people, particularly in the trades and those sorts of specialist industries.
“Employers are excited when they come across young people who are well equipped and have the right sort of aptitude and energy for jobs and that's a big challenge these days,” he says.
“Working independently from home, flexibility, all those sorts of things that they've become used to through their schooling over those Covid years don't necessarily transfer well into an employment situation.”
Employers are stepping up their representation at the events NZ Careers Expo holds, which kicks off in Christchurch on May 9, even as some education providers have been pulling back because of job cuts and restructures, he says.
When it comes to further and higher education, school-leavers are becoming a lot more “intentional” about what they do and why they're doing it, because it’s “no small investment on their behalf in both money and time”, he says.
The Reserve Bank is expected to be as focused on Wednesday on the wage data that Stats NZ will release alongside the new unemployment numbers.
ANZ forecast that would show average hourly earnings in the private sector rose 5.9% over the year.
That would be ahead of the rate of the inflation for the period, which Stats NZ has already reported at 4%.
While wage pressures were easing, they remained “above levels consistent with the Reserve Bank’s inflation target”, ANZ said in a research note.