Confidence in job market falls to lowest since first Covid lockdown

There are more job applicants than a year ago. Photo / 123rf

Kiwis believe job availability has continued to deteriorate, as the economic slowdown rolls on, according to a new survey.

The Westpac-McDermott Miller Employment Confidence Index fell by 2.2 points from 91.4 to 89.2 in the September quarter.

That was the lowest reading since the country was emerging from the first Covid-19 lockdown in 2020.

“The biggest driver of the weakness in confidence has been the perception that jobs are becoming much harder to find,” said Michael Gordon, senior economist at Westpac.

“Job vacancies have been shrinking for some time, and in the last few months we’ve seen a turn to outright job losses.”

Gordon said the softening jobs market follows a prolonged slowdown in the New Zealand economy over the past two years.

“Similarly, households recognise that it will take some time for lower interest rates to work their way through, and for businesses to find themselves back in the position of needing to find more workers,” he said.

Employment confidence fell in seven out of 11 regions, with Auckland recording the biggest fall this quarter.

“While Wellington remains the most downbeat region, Auckland is now not far behind,” Gordon said.

“This is a useful reminder that while public sector cutbacks have been well-publicised, it’s the private sector that has borne most of the pain in the jobs market to date.”

Falling interest rates may have boosted consumer and business confidence in other respects but households are taking a realistic view of how long this will take to flow through into better job prospects.

“The latest results suggest that the unemployment rate has continued to rise at a faster pace over the last year; we expect it to reach 5% for the September quarter,” Gordon said.

“Households also remained downbeat on the outlook for job opportunities a year from now, although that measure did tick slightly higher in the September survey.

“That outlook is probably a fair reflection of how the labour market tends to lag the broader cycle. We’re now two years into an economic slowdown, and while job vacancies have been falling for some time, it’s only in the last few months that we’ve seen outright job losses.

“Similarly, it’s likely that it will take some time for lower interest rates to work their way through the economy, and for businesses to find themselves back in the position of needing to find more workers.”

The earnings outlook in the survey was mixed.

Past growth in earnings slipped for a second quarter, consistent with the easing in wage growth that we’re increasingly seeing in the official figures (at least for the private sector). Expected earnings growth rose slightly, but it remains at an historically low level.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003. To sign up for his weekly newsletter, click on your user profile at nzherald.co.nz and select “My newsletters”. For a step-by-step guide, click here.