Former Economics Editor of the NZ Herald

Employment tally tipped to rise

Some job hunters take a very direct approach in their search for gainful employment. Photo / Paul Estcourt
Some job hunters take a very direct approach in their search for gainful employment. Photo / Paul Estcourt

Economists expect better-looking numbers when the September quarter jobs data are released on Thursday.

That is partly because the June quarter's 6.8 per cent unemployment rate and drop in employment looked, in the words of Westpac economist Felix Delbruck, "too bad to be true".

A Reuters survey of market economists' forecasts of the September unemployment rate range from 6.6 to 6.9 per cent, with the median at 6.7 per cent.

Employment is expected to rise 0.3 per cent, after a 0.1 per cent decline in June.

The unemployment rate has wobbled around a flat trend line of 6.6 per cent over the past three years as employment growth has only just kept pace with growth in the workforce.

"Not a jobless recovery, just a slow one" is the title of an analytical note by Reserve Bank economists Rebecca Craigie, David Gillmore and Nicolas Groshenny, which compares the current recovery with previous ones.

Compared with the recoveries from the 1991-92 and 1997-98 recessions both economic and employment growth have been subdued this time.

But employment growth has been stronger relative to GDP growth than previous recoveries, and growth in hours worked has outpaced employment growth.

That implies particularly low productivity growth, they point out.

In the September quarter labour market indicators softened.

The Institute of Economic Research's quarterly survey of business opinion recorded a second consecutive decline in the net balance of firms hiring.

Firms also reported that skilled labour had become easier to find.

The Westpac McDermott Millers employment confidence index, based on a survey of households, recovered modestly in the September quarter, but is still at the second lowest level since the recessionary trough of mid-2009.

ANZ said its job advertisements indicator suggested the unemployment rate would rise towards 7 per cent over the next six months.

Delbruck is picking 0.3 per cent employment growth and an unemployment rate of 6.7 per cent in line with the consensus. The household labour force survey has been plagued by a seesaw pattern, with unexplained dips tending to be followed by rebounds, he said.

In the first half of 2012, when GDP expanded by 1.6 per cent, employment growth had been dismal, not even keeping pace with population growth, while the unemployment rate rose from 6.4 per cent in December 2011 to 6.8 per cent in June.

Some of that weakness should be chalked up to sampling error, implying a statistical "bounce" in this week's numbers, he said.

"We are also mindful of the increasingly two-speed nature of the economy and the labour market," Delbruck said.

"The Canterbury rebuild is picking up rapidly while other regions and industries are sagging.

"There's a risk the surveys are understating that localised strength."

Sampling error notwithstanding, politicians are likely to focus on manufacturing employment numbers in Thursday's data.

The manufacturing sector employs about 12 per cent of employees.

At 246,500 in the June quarter it was up 1800 on a year earlier but down 20,000 or 7.4 per cent on the same quarter of 2008.

At 6.8 per cent New Zealand's unemployment rate only just makes the better half of the OECD rankings and compares badly with Australia's 5.4 per cent.

But the statisticians count people as unemployed only if they are actively looking for work, otherwise they are counted as jobless but not in the labour force.

The employment rate, by contrast, measures the proportion of the population aged between 15 and 64 who are employed.

At 72.6 per cent New Zealand has the seventh highest OECD employment rate and is slightly ahead of Australia on 72.5 per cent.

- NZ Herald

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