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NZ Herald
2 days ago
- Business
- NZ Herald
Inside Economics: Why the job market feels worse than the numbers look
I think, sadly, we can expect that tone to remain for the next few months at least. Next week we'll get the official unemployment rate, based on the Stats NZ Household Labour Force (HLFS) survey. This week's data was part of a monthly series that Stats NZ produces by tracking payroll filings with the IRD. It's timely data, but often prone to revision. That big one for economists arrives next Wednesday with Stats NZ's quarterly labour market data release. That will include employment and unemployment statistics from the HLFS as well as wage data from the Labour Cost Index and the Quarterly Employment Survey. After seeing the monthly employment data this week, economists at BNZ and ANZ are expecting unemployment will land at 5.3% – up from 5.1% for the March quarter – and higher than the Reserve Bank's earlier forecast of 5.2%. As expected... It's probably worth remembering that none of this is a surprise. These numbers have been widely forecast by economists. In April last year, as the job market was starting to get tough, I wrote: 'Economists expect that there will be somewhere between 30,000 and 50,000 more unemployed people by this time next year.' 'Expectations are that we'll eventually see the unemployment rate peak between 5.1 and 5.7 per cent in this cycle.' And here we are. Hopefully, unemployment peaks soon, although based on the gloomy second quarter we've just had, it might not be until the end of the year. It's likely that it will peak at around 5.5% which, believe it or not, is in line with the historic average. Stats NZ's long-running Household Labour Force Survey shows the average rate has been 5.5% since 1986. The data reached an all-time high of 11.2% in September 1991 and a record low of 3.2% in March 2022. If it's just average, then why does it feel so bad? One issue is that we are coming off that record low in 2022. So the transition we're experiencing is intense, even if the endpoint isn't going to be historically unprecedented. The level of unemployment is also being flattered by the large number of Kiwis leaving the country or opting out of the workforce to return to study. The participation rate – the number of adults actively engaged in the job market – has fallen to around 70%, the lowest rate since 2020. Another factor that may be skewing the average is the number of underemployed people. The HLFS is very specific in its definition of unemployment. It only counts people who have worked no hours at all. Those who worked part-time but would like to work more hours are classified as underemployed. It seems likely that higher levels of underemployment are also flattering the topline unemployment rate. So while the official unemployment rate tends to get all the headlines, these other variables are important to factor in. Different measures Economists can also look to data from big recruitment firms like Seek. The number of published job ads is a good barometer of the labour market. June figures were released by Seek this week. BNZ economists noted that the trend in job ads had 'resumed its downward slide, declining another 1.2% in June'. Then there are the Ministry of Social Development's benefit numbers. They aren't looking too flash either. There was a total of 216,000 people on a Jobseeker benefit in June, up from 196,000 a year earlier. Confusingly, the Jobseeker benefit category now includes those we would have once called sickness beneficiaries, as well as those we'd call unemployed. When we strip out those with health conditions or disabilities, the total was 120,000, up from 114,000 in June 2024 and 99,000 in June 2023. Despite all the intricacies and variables of the different measures, one thing we can say with confidence is that the labour market does not look to be in good shape, and the trend is still getting worse. But the labour market is considered a 'lagging indicator' for the economy. In other words, it's about the last thing to turn in an economic cycle. On the way down, employment usually holds up well as the economy slows. Firms are reluctant to let good workers go, knowing how hard it can be to find staff when things get busy again. On the flip side, unemployment often peaks well after the economy has begun its recovery, as firms remain cautious about expanding and hiring new workers until they are confident that the upturn will be sustained. That perhaps offers some consolation as gloomy employment numbers continue to roll in over the next few months. It's always darkest before the dawn and all that... Bright spots Monday's job numbers weren't all bad. For starters, the monthly numbers were positive (just) at 0.1%. But economists weren't hugely impressed by that, given, these monthly figures tend to be revised down. Revisions to previous months contributed to the worse-than-expected annual result. More promising were figures that showed that the primary sector is creating jobs. The sector had its largest month-on-month rise, at 0.9%, since 2023. As Informetrics economist Matthew Allman noted: 'emerging trends in filled jobs seem to match broader trends we have been seeing in the economic recovery, with better export earnings boosting the primary sector'. But the flow-on effects are yet to hit other areas of the economy, such as manufacturing and services industries, he said. That's creating a regional divide too, as southern regions benefit from the agricultural export boom. Southland, in particular, has experienced solid job growth in recent months. Here's hoping some of that positivity flows north. The biggest hit to employment in the past year has been in the construction sector. Compared to the previous year to June, construction lost 12,169 jobs (down 6%). It's not surprising Auckland's economy is struggling. Trump's tariff deadline looms Donald Trump's big tariff deadline is looming large this week and somewhat predictably threatens to rattle markets, which have been on something of a bull run in the past few weeks. It passes on Friday (Saturday NZT). President of the European Commission Ursula von der Leyen shakes hands with U.S. President Donald Trump during a meeting at Trump Turnberry golf club on July 27, 2025 in Turnberry, Scotland. U.S. President Donald Trump is visiting his Trump Turnberry golf course, as well as Trump International Golf Links in Aberdeenshire, during a brief visit to Scotland from July 25 to 29. Photo / Getty Images The US has now done deals with Japan, the UK, Europe, and it looks to have some kind of truce with China, so that should help ease concerns. There's also a likelihood of further deadline extensions if it looks like markets are seriously melting down. Donald Trump has shown over the past few months that he is prepared to push things to the brink but will do what he has to avoid a major crash – even if that leaves him looking like he has backed down. But the deadline remains a wildcard in a week of big economic news for the US. Economists estimate that the US will likely end up with a baseline average tariff of around 15-20%. Markets seem to have accepted that so far. But, while that is an improvement over the shock and awe of Trump's Liberation Day proclamations, it still represents a major setback to global trade. We're also still waiting to see what the real-world effects of the tariffs will be. So far, the impact on US inflation has been muted. On the one hand, that is promising. Perhaps the tariffs won't be as economically damaging as everyone expected. On the other hand, the delays and deals we're yet to see the full impact of the tariffs and the positive early signs might just embolden Trump to push a bit harder. We'll also get an interest rate decision from the US Federal Reserve on Wednesday in the US (Thursday NZT). It is not expected to cut rates, which means we can probably expect some fireworks as the President makes it clear what he thinks of that. The US also gets jobs data and GDP data this week. So all up it's looking like a big week for markets as they try to unpick the state of the United States. 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 to my weekly newsletter, click on your user profile at and select 'My newsletters'. For a step-by-step guide, click here. If you have a burning question about the quirks or intricacies of economics send it to or leave a message in the comments section.
Scoop
01-07-2025
- Business
- Scoop
Household Labour Force Survey Population Rebase From 2023 Estimated Resident Population
This report outlines the effect of estimated resident population (ERP) revisions on the Household Labour Force Survey (HLFS) for the September 2018–March 2025 quarters. Key points We have revised the historical HLFS data from the September 2018 quarter to the March 2025 quarter and investigated the effects of revised national population estimates (NPE), Māori population estimates (MPE), and subnational population estimates, on our series. While there were substantive changes to high-level estimates, the effects on key rates were negligible at the national level. The main effects of the revision between the September 2018 and March 2025 quarters are set out below: overall decrease in the working-age population, from 4,335,000 to 4,297,000 in the March 2025 quarter, with both male and female working-age populations decreasing by a similar amount overall increase in the Māori working-age population, from 649,700 to 658,300 in the March 2025 quarter, with the wāhine Māori working-age population increasing more than the tāne Māori working-age population the number of employed people decreased slightly faster than the number of people in the working-age population, leading to a downward revision in the seasonally adjusted employment rate in the March 2025 quarter, from 67.2 percent to 67.1 percent the working-age population was revised downward for men and women in most age groups in the March 2025 quarter, with the only upward revisions for teenagers (aged 15–19 years, men and women) and women aged 20–24 years all regional working-age population estimates were revised down. The largest percentage decreases were in Otago (down 2.3 percent, 5,100 people) and Southland (down 2.1 percent, 1,800 people) in the March 2025 quarter. Visit our website to read this report and to download CSV files: Household Labour Force Survey population rebase from 2023 estimated resident population: Using Scoop for work? Scoop is free for personal use, but you'll need a licence for work use. This is part of our Ethical Paywall and how we fund Scoop. Join today with plans starting from less than $3 per week, plus gain access to exclusive Pro features. Join Pro Individual Find out more
Scoop
24-06-2025
- Business
- Scoop
National Labour Force Projections: 2024(Base)–2078
National labour force projections indicate the future size and age-sex structure of the labour force usually living in New Zealand based on assumptions about labour force participation and average hours worked, and current policy settings. Key facts National labour force projections indicate the future size and age-sex structure of the labour force living in Aotearoa New Zealand. All data cited here relate to June years. Data before 2024 are sourced from the Household Labour Force Survey (HLFS, year ended June, unless otherwise stated). The projections indicate that: New Zealand's labour force will continue to grow, but the growth rate will slow in the long-term the labour force will age, reflecting increasing labour force participation rates among males and females aged 50 years and over (50+), and the general ageing of the population. Visit our website to read this information release:
1News
07-05-2025
- Business
- 1News
Unemployment rate unchanged at 5.1%
New figures have revealed the unemployment rate was steady at 5.1% in the March quarter. The rate was unchanged from the December quarter. But it remains the highest the unemployment rate has been since 2020, having risen over the past two years after coming off record lows during the pandemic. Today's newly-released labour figures were slightly below economists' expectations and the Reserve Bank's forecast for unemployment.. Data also revealed more Kiwis were now in part-time work this year as compared to last. Stats NZ labour market spokesperson Abby Johnston said seasonally adjusted levels of unemployment remained at 156,000 between the two most recent quarters. "While unemployment was unchanged over the quarter, longer-term trends mean the labour market appears quite different to the same quarter last year," she said. Annually, unemployment rose by 22,000 to 156,000, as measured by Stats NZ's Household Labour Force Survey. Employment remained relatively flat over the March quarter and decreased 21,000 annually to 2,914,000, according to Stats NZ. But the annual fall in employment was accompanied by a shift from full-time to part-time work. The number of people in full-time employment fell by 45,000 over the year, while the number in part-time employment grew by 25,000. Employees are classed as part-time if they usually work less than 30 hours per week. 'Approximately 21% of employed people work part-time – 12% of men and 30% of women,' Johnston said. In February, the Reserve Bank picked unemployment ticking up to 5.2% in the March quarter, before peaking at that level and slowly falling towards the end of the year. Bank economists had picked between 5.2% and 5.3% for the rate before today's release, having suggested a small rise in unemployment in the March quarter. In a report last week, Westpac senior economist Michael Gordon said: "While the New Zealand economy has started to regain some momentum since late last year, the labour market remains in a soft patch. "The monthly jobs data has stabilised and even ticked up a little in recent months, but not by enough to match the growth in the population, which is likely to mean a further rise in the unemployment rate. "At the same time, the ongoing degree of spare capacity in the labour market will continue to put downward pressure on wage growth." More to come
