Unemployment rate falls but number of people in work grows at less than half the pace of preceding three quarters.
The jobs numbers out yesterday were less encouraging than the headline drop in the unemployment rate to 5.6 per cent suggests.
The number of people employed grew at less than half the rate recorded in any of the three preceding quarters, and outside Canterbury there was no net increase at all.
It is another sign of a slowdown from the heady pace of economic growth in the second half of last year and the March quarter this year.
But the big picture remains one of a pretty buoyant labour market in which the high-level indicators like annual employment growth, the unemployment rate and the labour force participation rate would be the envy of many developed countries right now.
Not that those aggregated measures are any comfort to somebody struggling to find a job, or to recruit someone with the specific skills required.
On the supply side of the labour market, two big trends are evident.
One is strong growth in the working age population, which is everyone aged 15 or older.
The other is a high participation rate, which is the proportion of working age people counted as in the labour force, that is, either employed or actively looking for work and available to start.
As of the June quarter the working age population was 3.58 million, which is up 16,100 or 0.5 per cent from March and up 57,000 or 1.6 per cent on a year earlier, the strongest annual growth for seven years.
It has been boosted by the surge in net immigration, in particular by the fact that the net flow of New Zealanders to Australia has dwindled to a meagre and exiguous trickle.
The net loss of people to Australia in June would have fitted in a single airport bus - just 20 - and over the full year it was 8300, a nine-year low.
Altogether there was a net population gain of 38,400, up from 7900 the year before. It is the highest net gain from permanent and long-term migration since the October 2003 year and compares with a 20-year average of 11,700. It boosted the population by around 0.9 per cent.
The Treasury noted this week that migration inflows have been particularly strong in the 20- to 34-year age group.
"The population in this age group grew 3 per cent (27,000) in the year ended June, the largest increase on record," it said.
"Also adding to the labour market are temporary migrants on work visas, which increased to 68,000 in the year ended June 2014 from 59,000 in the previous year."
The working age population includes 620,000 people over the age of 65, but an increasing proportion of them are still working: 21 per cent or twice the proportion 10 years ago. Because New Zealand Superannuation is not means-tested the problem of high effective marginal tax rates if people continue to work past retirement age is avoided.
Meanwhile, the labour force participation rate has eased back from the record 69.2 per cent recorded in March, but is still at a level equalling its third highest ever. ANZ's economists take some heart from the fact that the recent upward trend in labour force participation has been widespread across age brackets and for both males and females, which suggests to them that it is unlikely to be due to statistical quirks.
And Westpac's Michael Gordon thinks there is room for the participation rate to go a bit higher over the next few years before the effects of an ageing population start to dominate.
"But it's extremely unlikely that it will continue to rise at the same pace that it has over the past year. That means from here on, the growing demand for workers will increasingly have to be met from the ranks of the officially unemployed." That demand should remain strong. Hiring intentions in both the ANZ Business Outlook survey and NZIER quarterly survey of business opinion (QSBO) have been running at historically high levels.
The Ministry of Business, Innovation and Employment maintains a skilled vacancies index derived from job advertisements. It is at its highest level since early 2008 and up 17 per cent on a year ago. But whether firms can find the skills they need is another matter.
The QSBO has been recording a steadily rising net balance of firms saying it is getting harder to find skilled labour, albeit not at the levels prevailing in the mid-2000s.
Statistics New Zealand's annual business operations survey of 36,000 businesses, published in April, found 31 per cent reporting vacancies that were hard to fill, particularly for tradespeople. The trend has been rising since 2009.
Forestry, machinery manufacturing, construction, telecommunications and computer systems design were the industries with the highest levels of hard-to-fill vacancies - all above 40 per cent.
When asked what actions they had taken as a result, 39 per cent of the businesses reporting hard-to-fill vacancies said they increased salaries, 35 per cent trained less qualified recruits, 26 per cent brought in contractors, 23 per cent recruited overseas and 29 per cent stepped up training.
Only 51 per cent of the firms considered all their staff to have all the skills required to do their jobs, and for tradespeople the proportion falls to 44 per cent.
Economists Richard Fabling and David Mare, in research published last year, have interrogated the data from previous years of the same survey.
They were looking in particular for what characterised firms reporting persistent difficulty in recruiting the staff they required.
It was not what you might expect.
They found that better-performing firms were more likely to report recruiting difficulties than poorer-performing ones.
Firms which undertook research and development, had made a major technological change, had overseas direct investment, exported, innovated and invested in expansion were more likely than the average firm to report hiring difficulties.
They found that larger firms and firms with higher wage premiums were more likely to report recruitment difficulties, while those with a relatively high proportion of long-tenure employees were less likely to.
"These statistical relationships suggest recruitment difficulties are not primarily caused by poor firm performance or by firms' inability to pay the market wage," they said.
"The pattern could be be due to higher-paying firms having higher recruitment standards than lower-paying firms or needing to fill more specialised or more technically advanced positions which are inherently more difficult to fill." When they controlled for fluctuations in the business cycle, and for local (as opposed to national) labour market effects, they found those factors made little difference to the persistence of recruitment difficulties.
"Taken together, we interpret these results as strong evidence against the 'sore losers' hypothesis - the idea that reported hiring difficulties are driven by poor performing firms who cannot pay the market rate for skills. Instead, the results are more consistent with the suggestion ... that technical progress may create persistent skills shortages, for a subset of jobs, over long periods of time."