While unemployment is still set to reach 5% this year, the job market is showing signs of stablisation. Photo / 123rf
While unemployment is still set to reach 5% this year, the job market is showing signs of stablisation. Photo / 123rf
Employment confidence rose slightly in the December quarter, partially due to a rise in perceptions of job availability, although it won’t stop unemployment from rising above the 5% threshold this year.
The Westpac-McDermott Miller Employment Confidence Index rose to 91.6 in the December quarter, up 2.4 points from the Septemberquarter at 89.2.
A reading below 100 indicates more New Zealanders are pessimistic about the state of the labour market than are optimistic, with confidence still near its lowest levels since the 2020 Covid lockdown.
Westpac chief economist Kelly Eckhold said the main driver in the December quarter was an improvement in people’s perceptions about the availability of jobs.
“The current opportunities measure lifted from -50 to -44, still very soft compared to history, but this was the first improvement we’ve seen on this measure in over two years,” Eckhold said.
The current opportunities measure is closely linked with the unemployment rate, and while Westpac still predicts the unemployment rate will rise above 5% in the near future, the latest reading offers some hope that it won’t rise further.
The expected job opportunities measure also rose slightly from -24.9 to -20.7, up by 4.2 points, although this does not necessarily correlate with actual labour market outcomes.
Eckhold said the employment confidence survey joins a handful of recent indicators that have pointed to some stabilisation in the jobs market, including the Monthly Employment Indicator which showed a 0.3% increase in jobs filled in November.
However, while job advertisements have seemingly bottomed out, the number of ads is at its lowest since 2013 and there is no evidence yet of a pickup in hiring.
Westpac chief economist Kelly Eckhold said the current opportunities measure lift was the first improvement seen by this measure in over two years.
“Easier monetary policy has helped to boost confidence across some parts of the economy,” Eckhold said.
“But realistically, it will take some time for lower interest rates to have their full effect on demand and activity, and perhaps longer still for businesses to find themselves back in the position of needing to expand their workforce.”
Looking at the regions, confidence rose in seven areas with particular gains in the major centres including Auckland and Christchurch, while confidence dropped in four areas, including Northland and Waikato.
Nelson and the West Coast also reported a strong lift in confidence, though this was driven by earnings growth rather than job availability.
The survey had a sample size of 1553 interviews, with a margin for error of the Consumer Confidence Survey a maximum of plus or minus 2.5%, at 95% confidence.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
