A jobless recovery is expected to be reflected in employment numbers out on Thursday.

The economy needs to have added about 10,000 jobs in the December quarter just to keep pace with growth in the working-age population.

But in every quarter last year, employment shrank and most economists expect the household labour force survey to record a further decline of around 0.1 per cent (2100 jobs) over the last three months of the year.

That would push the unemployment rate up to 6.8 per cent from 6.5 per cent in September.

Nevertheless, the labour market is expected to show preliminary signs of stabilisation, according to ANZ National Bank economist Khoon Goh.

Specifically he expects a rise in hours worked, a measure which has fallen a cumulative 4.3 per cent since June 2008 to a record low per person.

Many employers have preferred to respond to falling demand by cutting hours rather than staff numbers; conversely, improving activity is expected to show up in hours worked before headcount.

The Ministry of Social Development says 66,300 people were drawing the unemployment benefit at the end of December, up from 60,700 three months earlier and 30,500 at the end of 2008.

Goh said that adjusted for seasonal effects, the increase was about 2000 - compared with 14,000 in the June quarter and 7000 in the September quarter. Clearly the rate of job shedding was slowing, he said, but nonetheless jobs were still being shed.

The Department of Labour monitors job advertisements. It found a 5 per cent increase in advertisements for skilled people between September and December, but noted that that still left the level of advertising 23 per cent below where it was in December 2008.

The New Zealand Institute of Economic Research's quarterly survey of business opinion (QSBO) found fewer firms saying they were finding it easier to recruit both skilled and unskilled workers but the level remains high by historical standards, signifying a weak labour market.

The long queues of people applying for jobs at a new Auckland supermarket last month attest to that.

On the other hand, the QSBO found slightly more firms saying they intend to increase staff numbers than reduce them, which is a little better than the long-run average for that indicator.

"That suggests the quarterly rate of employment growth will be close to the historical average of 0.3 per cent," said Westpac economist Dominick Stephens.

Westpac is forecasting an increase of that order (equivalent to 6500 jobs), in contrast to the market consensus of a further decline.

But part of its reason for that more optimistic figure is a technical statistical one. Employment growth figures had been volatile over the past two years, possibly because of changes to the seasonal pattern that were difficult for Statistics New Zealand to correct for, Stephens said.

In 2007 and 2008, employment growth in the December quarter had been strong, only to be followed by a shockingly weak March quarter.

The Reserve Bank has forecast an unemployment rate of 6.6 per cent for the December quarter.

Stephens said it would need to drop to 6.4 per cent or lower to bring a March rise in the official cash rate seriously into the frame.

Goh said that the earliest an improvement in the labour market would be apparent in the hard data would be in the March quarter figures reported in May - one of the reasons ANZ National Bank believes it will be June before the Reserve Bank raises the OCR.

Meanwhile wages data due this morning are expected to be subdued.

The market consensus is for the labour cost index to record a 0.4 per cent rise in private sector salary and ordinary time wage rates in the quarter, pulling the annual increase down to 1.6 per cent, compared with a seven-year low of 2.1 per cent in September.


A fall in job advertisements in January highlights the fragility of Australia's economic recovery but stronger growth is expected into 2010, an ANZ Banking Group survey finds.

Total job ads growth slowed to just 1 per cent in January in trend terms to be at its slowest pace of expansion since August 2009.

Despite the slower growth pace, the result was "still firmly positive", ANZ said yesterday.

The number of jobs advertised in newspapers and on the internet fell by 8.1 per cent in January to 134,106 a week, the ANZ Job Ads survey said.

"Despite this month's decline relative to December, total job advertisements are continuing to improve month on month in trend terms," ANZ acting chief economist Warren Hogan said.

"This has already translated into solid employment growth through quarter four of 2009 and helped to keep the unemployment rate in check, despite Australian accelerating population and labour force growth.

"The ANZ and other job ads surveys are improving, albeit at a softening pace."

- additional reporting by AAP