No signs of weakening job numbers despite looming recession - Infometrics

  • 29/03/2023

New data shows there's no stopping higher job numbers yet as employment levels continue to rise despite a looming recession, Infometrics says.

Statistics New Zealand's monthly employment indicators showed filled job numbers rose again in February, up 0.4 percent from the prior month (seasonally adjusted).

At a regional level, filled jobs figures show some slowdown in jobs growth in areas affected by Cyclone Gabrielle. Gisborne was 1.8 percent lower than a year ago and employment growth in Hawke's Bay slowed back from 1.2 percent per year in January 2023 to 0.7 percent per year in February.

While employment in February rose in Auckland (2.6 percent), Wellington (1.9 percent) and Canterbury (3.4 percent). 

"Employment levels continue to rise, with no signs yet of any sustained weakening in job numbers. Although the labour market is always the last part of the economy to turn, the fact that jobs growth is still being sustained underscores the pressures still facing the economy," Infometrics said in a statement.

Both the RBNZ and Treasury have agreed New Zealand will plunge into a technical recession this year, with the latter projecting the country's economy to contract 0.8 percent across three quarters. 

Higher unemployment and recessions usually go hand-in-hand, as lower demand for goods can force businesses to make job cuts.

Filled job numbers in February 2023 were sitting 2.5 percent higher than a year ago – a rate that is slightly overcooked given it compares to a weaker period at the start of 2022, when Omicron was disrupting some economic activity, Infometrics said. 

"However, that level of jobs growth is above population growth, and suggests there is no let-up in labour market pressures yet," Infometrics said.

There were employment gains are across the board in services, with notable increases compared with the same month in 2022 in tourism-related industries such as accommodation and food services (8.5 percent), arts and recreation services (6.6 percent), and transport (6.2 percent).

Filled jobs growth remains substantial in other areas too, with a 2.9 percent increase in professional services filled jobs and 4.2 percent increase in administrative and support services jobs.

"The stronger employment growth in tourism-related industries is to be expected, given that tourism activity levels are still recovering, and more international workers are arriving back in New Zealand," Infometrics said.

"But the continued strong growth in areas including professional services and public administration comes after strong growth a year ago, with no restraint in employment detected in these areas.

"Such sustained jobs growth reinforces that businesses are still upbeat enough to hire, despite job ad numbers having moderated. There appears to be a delayed effect for employment, with previously unfilled jobs now being filled finally."