Auckland job ads power ahead of the regions

By BRIAN FALLOW

Job advertisements last month reinforce the picture of a two-speed economy, with Auckland powering ahead while the regions wilt.

ANZ's job ads indicator rose 0.6 per cent nationwide in January, seasonally adjusted, continuing the gradual upward trend last year.

But that masked a growing dichotomy between Auckland and the rest of the country, ANZ chief economist David Drage said.

Job ads in Auckland rose 7.2 per cent last month to be 30.1 per cent up on January last year and their highest since September 2000.

In contrast all the other regions fell last month except Christchurch and even there recent increases in job advertising have not been sufficient to make up for weakness over the past 18 months, Drage said.

"This mirrors the changing drivers of economic growth. Thanks to low interest rates and migration-driven population growth domestic sectors are growing strongly, particularly the Auckland housing market," Drage said.

"But after a period of robust growth, activity in some provincial centres has plateaued as the headwinds of a difficult international environment and recent strong gains in the kiwi dollar feed through to rural incomes."

However, with nationwide job ads continuing to run above 30,000 a month, and surveyed hiring intentions relatively strong, further employment gains were likely over the coming months, Drage said.

Statistics New Zealand yesterday reported a 2.4 per cent increase in employment over calendar 2002, and a drop in the unemployment rate to 4.9 per cent, a 15-year low.

Coupled with the 3.3 per cent annual increase in hourly earnings recorded by the quarterly employment survey last week, that told a compelling story about household income growth, Drage said.

Even rural incomes, though down from the unprecedented heights of 2001, are relatively robust. Though commodity prices have corrected downward from their recent highs they remain at, or better than, the top of the range prevailing over the last 15 years of the 20th century, Drage said, even after adjusting for the rising New Zealand dollar.

Annual employment growth has slowed over the past year from 3.5 per cent in March to 2.4 per cent in December.

Bank of New Zealand economists said that the implications for monetary policy would depend on why it was slowing.

If it was because economic growth was starting to come off the boil the Reserve Bank would be comfortable that the pressure on the economy's resources was easing, and monetary conditions could as well.

But if the slower employment growth was simply a matter of employers being unable to find the extra staff they needed then the bank would be wary of wage inflation and reluctant to lower interest rates.

The sharp drop in the unemployment rate in December, to 4.9 per cent from 5.4 per cent, is partly explained by a fall in the participation rate, which is the proportion of the working-age population who are employed or seeking work.