Stats NZ released the September Quarterly Labour Market Report which reported that the unemployment rate rose to 4.2% in the third quarter. The September quarter’s jobless rate increased from the June quarter’s which was the lowest since mid-2008. A modest 6,000 jobs were created during the quarter. Annual average wage growth increased to 2.4% which in part reflects the new minimum wage level which came into effect on April 1.
+6,000: The economy gained 6,000 jobs in the quarter spanning July-September 2019.
4.2%: The unemployment rate rose to 4.2%.
2.4%: Overall wages increased 2.4% over the last year.
Stats NZ released the September Quarter Labour Market Report which reported that there were healthy wage increases over last year. While overall wages rose by 2.4%, average ordinary time hourly earnings increased by 4.2 percent annually, and both the public and private sectors increased by 3.9%. Job creation, though modest, continued from the last quarter adding 6,000 new positions to the economy. Among the sectors which saw the largest job increases were health and social services which added 20,900 positions, construction with an increase of 6,000 jobs and manufacturing jobs which rose by 4.700.
The labour market seasonally adjusted underutilisation rate fell to 10.4 percent. This is the lowest underutilisation rate since the June 2008 quarter. In addition to those without a job who are are currently seeking work, this figure includes those who are employed part-time and who both want and are available to increase the number of hours they work, those who want a job and are available to work but are not currently looking for a job and potential job seekers who are unavailable to start work but are looking for a job and will be able to start work within the next month. Underutilisation provides a broad gauge of untapped capacity in New Zealand’s labour market. This is the first time since the March 2009 quarter that the number of underutilised New Zealanders has fallen below 300,000.
The strong job creation in the June quarter did not continue with the same strength in the September quarter. While this does not necessarily suggest a long-term slowdown in job growth, it was enough to push the unemployment rate up to .03 percentage points to 4.2%. The participation rate only increased by a nearly imperceptible 0.1%.
Some important sectors had significant job losses during the quarter. Professional, scientific, technical, administrative, and support services jobs fell by 15,300; education and training positions decreased by 13,500; and transport, postal and warehousing lost 5,600.
When viewed from a high level, the wage gains reported appear impressive. However in the year until September, 48% of salary and wage earners had received a wage increase above 2% during the previous 12 months, while 40% reported no annual increase according to ASB (Auckland Savings Bank). In an environment when a small majority are experiencing meaningful pay increases, two out of five New Zealanders have yet to reap any raise in pay.
The latest IMF (International Monetary Fund) World Economic Outlook predicts that New Zealand’s economy will grow at 2.5% this year and will increase to a growth rate of 2.7% in 2020. These growth predictions are striking because the forecasts for all advanced economies for this year and next is just 1.7%.
However, many New Zealand economists are skeptical of the IMF’s outlook for Australia. One economist pointed to the most recent NZIER Quarterly Survey of Business Opinion (QSBO), which showed the lowest level of confidence since 2009. An additional concern expressed is that the slowdown in global growth will impact New Zealand’s economy.
One factor that has contributed to the nation’s economic advancement has been the strong rate of population growth due to the high level of migration. New Zealand’s population grew 1.9 percent annually as of June 2018. This growth rate is high compared with the growth rates of 1.6 percent for Australia and 1.2 percent for the global population. Yet due to a slowdown in migration and a migrant exodus, the 2018 figure was down 0.2 percentage points from 2017 when it was 2.1%.
Will New Zealand’s economy and population continue to grow and outpace the expansion of other advanced economies? Regardless of near-term results, employers with a long-term outlook should take into consideration the predictions of strong growth and plan their talent acquisition and retention strategies accordingly. The drop in underutilized New Zealanders in the September quarter which showed a drop in available workers and sustained unemployment rates of under 5% indicates that those enterprises which avail themselves of recruitment expertise in a tight labour market will have the competitive edge in the months and years to come.