Economy showing 'green shoots of recovery' - economist

The "green shoots of recovery" are starting to show in the economy here, despite the ongoing carnage overseas as the COVID-19 pandemic rages on. 

But the effects of dried-up immigration and supply chain issues are perhaps still to be felt, says economist Cameron Bagrie.

"We're starting to see a little bit more blossoming," he told The AM Show on Tuesday.

"End of last week we saw another slight fall in the Jobseeker numbers - that's two weeks in a row. If we see that building over three to four weeks' we'll get a lot more encouraged."

The latest figures from the Ministry of Social Development showed on October 23 there were 203,776 people on the Jobseeker Support benefit, down 395 on the week before. And there were 1784 fewer recipients of the COVID-19 Income Relief Payment (CIRP) too, showing that even as that temporary assistance ends, people aren't just going onto the main unemployment benefit.

All-up, 2429 people cancelled their Jobseeker or CIRP because they'd gone into work in that week.

"We're starting to see anecdotes on the ground coming from recruitment firms - people are starting to hire again," said Bagrie.

But not every employer is finding the staff they're after.

"Skill shortages are becoming a big problem - we used to import an awful lot of labour. We shut the door on the imported labour. You only have to talk to the orchardists down in central Otago in regard to what their big concern is for the summer months and next year - it's actually getting the people in to pick the fruit off the trees."

With the borders likely to be shut to most for the foreseeable future, some might think it's a chance to bring house prices down, thanks to less demand. But not so fast, says Bagrie.

"That's going to have an eventual impact on demand for housing, new cars, these sorts of things in 2021, but it's also going to have an impact on supply because we've been importing an awful lot of Labour to fill those niche gaps, but also seasonal workers...

"If we look where we are going to be in the next sort of 12 months, the big issues across New Zealand going forward are actually on the supply side - finding skilled labour... as COVID keeps on rearing its ugly head and accelerating, supply chains are going to be tested around the globe. 

"We're seeing imported items down about 9 percent on a year ago. Part of that is less demand, but a part of it is the availability of supply."

Cameron Bagrie.
Cameron Bagrie. Photo credit: The AM Show

The next official unemployment statistics aren't out until later this week. It's likely it'll be up around 6.5 percent - that's the current estimated working-age population currently on Jobseeker Support.