Brad Olsen says sustained job growth in New Zealand's economy during recession is 'unusual'

A leading economist says it's "unusual" to see sustained job growth despite New Zealand being in a recession and having "challenging" economic times ahead. 

Employment indicator figures for June released by Stats NZ last week showed a 0.4 percent increase (9537 jobs) to 2.38 million filled jobs. 

That’s despite New Zealand officially being in recession. Our unemployment rate is still very low at 3.4 percent after previously being at near-record lows of 3.2 percent at the end of last year. 

Infometrics Principal Economist Brad Olsen told AM Early on Monday the figures are "unusual". 

"We are continuing to see that sustained level of job growth, which seems unusual given we find ourselves still in a recession but over the last month, we've seen a further expansion of 0.4 percent when it comes to filled jobs numbers," Olsen said. 

"At this point, we've seen the number of jobs being added over the last year in the services sector, for example, up 4.2 percent, that's the fastest annual growth in about 15 years. So certainly a lot of momentum coming forward… despite the fact we are heading into more challenging economic times."

The figures also showed accommodation and food services up 8.5 percent (12,272 jobs), the education and training industry up 4.7 percent (9495) and the public administration and safety sector up 5.5 percent (8,303 jobs).

But it isn't all good news with Olsen telling AM Early host Nicky Styris not all industries have seen an increase in jobs. 

Olsen pointed to the primary sector, which has slipped backwards over the last year with the number of jobs in agriculture, forestry and fishing down by about 3000. 

"I think that reflects there are some parts of the economy that certainly are struggling at the moment, the likes of global economic growth have slowed our export potential in the goods market," Olsen explained.  

"We've seen in recent times the likes of the dairy trade auctions continuing to push dairy prices lower, so there are some real challenges coming forward.

New Zealand is currently in the middle of a migration surge, with Olsen saying the 25-29 age bracket is seeing a jump in jobs filled. 

"I guess the challenge we're sort of seeing as we head forward is we've now had six months through 2023 of very strong, very positive employment growth, but at the same time, we've seen job ads have been pulling back," he said. 

"So it does seem this high level of migration has been boosting employment now, the question is for how long it might continue." 

Stats NZ will release the latest data on New Zealand's unemployment rate this week, with Infometrics predicting a slight rise to 3.5 percent - up from the current rate of 3.4 percent. 

The Reserve Bank has been trying to cool the economy through consistently raising the official cash rate over the last year.

But Olsen questioned how cool the economy is, given employers are continuing to add jobs and wage increases are also still coming through. 

"Employers who have desperately worked over the last year or so to get those workers are not going to want to let them go particularly quickly, so they are still going to have to pay out some of those wage increases," he said.

"We still see there to be a bit of heat. We've talked about there being a sort of a red hot core of inflation still remaining around. I think there is still a core level of wage inflation also likely to remain here, not as high as the peak rate, but certainly not getting back to previous levels particularly quickly."

Watch the full interview with Brad Olsen in the video above.