Fuel prices on the rise: What could it mean for job-hunters?

It’s still unclear what the surge in fuel prices will mean for anyone looking for a new job or anyone looking to negotiate a better pay rise in their existing job.

Unemployment reached a 19-year high of 5.4% in the December quarter, driven in part by more people moving out of training and education and back into the workforce.

That’s well above where it was immediately after Covid but is still below the levels seen during the late 1990s and after the Global Financial Crisis, and well below levels reached in the early 1990s.

Westpac economists are now forecasting that the labour market will remain weak through to the middle of the year, with unemployment peaking at 5.6% before ending the year back at 5.4%.

In their latest forecasts, they warn of a “hole in economic growth” during the middle of the year and suggest the weak labour market could “crimp the recovery in household spending and the housing market”.

Reserve Bank Governor Anna Breman has suggested that households and some firms will be a bit more cautious about spending, as they face higher-than-expected inflation and lower-than-expected growth.

But she told Newstalk ZB it was unclear what that would mean for the labour market. The economic impact of the fuel supply disruptions would depend on how long the disruptions continued, she said.

“We’ll be watching the labour market very closely. What we’ve seen in recent data is the labour market still being weak, but signs of the labour market strengthening,” she said.

“It will be important to keep on looking into that data in detail to see how the economy evolves going forward. The latest data we have is still before the oil price shock that we’re facing right now.”

While the slowdown could push down job prospects and incomes, Breman was also watching out for a potential wage-price spiral, in which rising living costs force a rise in incomes which in turn leads to even more price increases.

The latest Westpac-McDermott Miller Employment Confidence Index survey - carried out in the first half of March as the latest conflict was just breaking out - showed households were the most positive they have been in two years about current and future job opportunities, their actual and expected earnings, and their job security.

However, pessimistic households still outnumbered optimistic households.

Westpac senior economist Michael Gordon said the situation may have changed in the past two weeks, as more households became aware of the economic consequences of the conflict.

“It’s unclear whether this confidence will be maintained in the months ahead, in what is an uncertain and rapidly evolving situation,” Gordon said.

Deputy Prime Minister and Associate Finance Minister David Seymour told Newstalk ZB the Government couldn’t entirely insulate businesses and the economy from that impact.

“There’s clearly a challenge going on and there are things the Government can control and others they can’t. I think the Government is doing its bit to ensure supply keeps up.”

Michael Sergel is Newstalk ZB’s business reporter. He’s been covering business, politics, local government and consumer affairs for more than a decade.