Former Economics Editor of the NZ Herald

Lacklustre job figures tipped for quarter

ANZ's composite job ads indicator fell a seasonally adjusted 3.9 per cent in June.  Photo / Martin Sykes
ANZ's composite job ads indicator fell a seasonally adjusted 3.9 per cent in June. Photo / Martin Sykes

Economists expect lacklustre jobs figures this week, with just 7000 more people employed and an unemployment rate of 6.5 per cent - in line with its average over the past three years.

A Reuters poll found the median expectation of 11 forecasters is for employment to have risen by 0.3 per cent (just under 7000) in the June quarter, seasonally adjusted, implying a 24,000 or 1.1 per cent rise over the year.

It would also represent a relatively high employment rate - the employed as a proportion of the working age population (everyone 15 or older) - of 64.1 per cent. It has averaged 63.9 per cent over the past two years.

Economists expect the participation rate - the proportion of the working age population either employed or actively seeking work - to have eased back to 68.6 per cent from 68.8 per cent in the March quarter, its highest since December 2008.

The higher participation rate helped push the unemployment rate during the first three months of the year up to 6.7 per cent.

Economists expect it to have eased in the June quarter to 6.5 per cent, which it has wobbled around for three years.

ANZ's composite job ads indicator fell a seasonally adjusted 3.9 per cent in June. "The trend in our composite series has been flat since it stopped falling in mid-2009, suggesting that outside the usual churn the labour market recovery since the recession has been relatively tepid," ANZ economist Sharon Zollner said.

"Overall, job ads data is consistent with an unemployment rate hovering around the 6.5 per cent mark over the next six months."

In the Institute of Economic Research's quarterly surveys of business opinion firms have been reporting it is getting harder to find the labour they need, especially skilled staff, though not as hard as in the years before the recession, when unemployment was about 4 per cent.

In the June survey hiring intentions were modestly positive, with a net 4 per cent expecting staff to rise.

But a net 4 per cent of firms reported falling numbers over the previous three months, where a net 5 per cent of them in March had expected a rise.

In the Reuters poll economists expect a 0.5 per cent rise for the June quarter in the labour cost index (for private sector salaries and ordinary time wages) - an indicator of underlying wage inflation.

Westpac economist Felix Delbruck said wages had been rising about the historical average rate, despite high unemployment, suggesting skill shortages exist in some jobs or regions.

"However there is little sign that wage pressures have accelerated over the past few quarters. Annual wage inflation in the construction and real estate sectors as a whole remains contained, though there has been outsize wage inflation in the Canterbury construction sector, and the Westpac McDermott Miller employment confidence survey showed the number of people reporting wage increases falling back in June," he said.

Bank of New Zealand economist Stephen Toplis, however, describes the labour market as "worryingly tight".

"Sure the unemployment rate is 6.7 per cent but the current level of employment intentions suggests employment growth will be sufficiently strong to see this drop steadily over the next three years."

- NZ Herald

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