The hospitality and tourism sectors are still struggling to fill positions in the lead up to the holiday season. Photo / Getty Images
The hospitality and tourism sectors are still struggling to fill positions in the lead up to the holiday season. Photo / Getty Images
The screws might be turning on the economy as interest rates rise but don’t expect to see much sign of that recessionary pressure in the job market yet.
Stats NZ will reveal labour market data for the first quarter on Wednesday - including the fresh numbers for the unemployment rateand wage growth.
Economists are picking that the labour market is still extremely tight with little change from the current rate of 3.4 per cent.
Westpac and Kiwibank are picking no change at all, ASB sees a slight bump to 3.5 per cent and ANZ is picking a dip to 3.3 per cent.
Regardless of where the final number lands, “the labour market remains tight as a drum,” said Kiwibank chief economist Jarrod Kerr.
Meanwhile, wage growth would likely continue to lift as labour demand remains strong, and employees seek pay rises in a cost of living crisis, he said.
Kiwibank expects the annual wage bill will hit a new survey high of 4.6 per cent.
Wage growth tended to be the most lagging element of the economic cycle, said Westpac senior economist Michael Gordon.
“With that in mind, we think that the current upturn in wage growth has further to go, even with consumer price inflation now clearly past its peak.
Westpac expects a 1.1 per cent rise in the Labour Cost Index (LCI) for the March quarter, which would take the annual growth rate to a record high of 4.4 per cent.
Jobs growth appeared to have picked up momentum in recent months, Gordon said.
“In part, that’s because the return of migrants means there are more people to hire. But the overriding factor is that businesses are still in hiring mode.”
“One of the key indicators of the economy that we’re watching is Stats NZ’s monthly measure of filled jobs,” he said.
This figure is drawn from tax data, so it was quite comprehensive and tended to be a good predictor of the Household Labour Force Survey (HLFS) measure of employment (although they were slightly different in concept - number of filled jobs vs number of people employed).
Filled jobs were up by 1.1 per cent over the March quarter, which we’ve translated into an expected 0.8 per cent rise in HLFS employment.
ANZ economist Henry Russell also noted the recent surge in net migration inflows implied solid growth in the working-age population.
“We are also assuming (a better word than forecasting, in this instance) that the participation rate remained at its record high of 71.7 per cent.”
None of the economists were putting too much weight on exact numbers in their forecasts, given the variables currently at play in the economy.
“Correctly picking quarterly movements in the HLFS is more art than science,” said ASB senior economist Mark Smith.
Kiwibank chief economist Jarrod Kerr.
“We expect the metrics of this survey to confirm that employment has remained above its maximum sustainable rate, but with labour market slack to progressively emerge over the course of the year.”
There is a broad consensus that we are headed toward an unemployment peak of about 5.5 per cent as the economy slows.
Compounding the forecasts for this quarter, on two fronts, is the ongoing fallout from the Auckland flooding and Cyclone Gabrielle.
The weather events add a layer of complexity to the economy through the immediate financial damage they caused - literally wiping out businesses and jobs - as well as adding to labour shortages in the construction sector as the rebuilding gets under way.
Further to that, Stats NZ has warned that the weather events also impacted its ability to carry out the Household Labour Force Survey as per normal.
It has reported a slightly lower sample rate, for the results, but noted:
“We remain confident that all official national labour market measures remain fit for purpose this quarter.”
