As unemployment worsens, data is too slow to give NZ a good steer on economy, AUT says

The Auckland University of Technology (AUT) says unemployment may have already reached 4.8%, using a model designed to give an early warning of an economic downturn.

According to Stats NZ, the unemployment rate rose to 4.6% in the June quarter, up from 4.4% in the March quarter.

The university said its Unemployment Rate – Nowcast (UR–Now) model estimated the rate may have jumped to 4.8% in July.

That was based on data showing more people on benefits, and fewer numbers of filled jobs.

AUT, where a new model aims to show early warnings of economic downturns. Photo / Supplied

AUT Professor of Economics Tim Maloney and colleagues designed the model.

“There have been recent predictions of pending recessions in New Zealand and many other developed economies,” Maloney said.

“Unfortunately, lags in the release of the official unemployment rate prevent us from knowing what is currently going on in the labour market. This is why we built UR-Now – to provide early warnings of economic downturns.”

The university said the official unemployment rate was based on Stats NZ’s Household Labour Force Survey. But it said that data was collected over a three-month period.

“By the time the data is released, more than four months have elapsed since the start of the quarter.”

In contrast, the United States Bureau of Labour Statistics provided jobs data for every month, usually just a few days after the end of the month.

Maloney said more updates to UR-Now could provide an advanced indicator of a further weakening in the New Zealand labour market.

He said the Reserve Bank’s monetary policy statement last week forecast a slowdown in the jobs market, with the central bank picking a maximum unemployment rate of 5.4% in a year’s time.