Did somebody say 'tight labour market'?! Official unemployment figures have totally shattered expectations on the low side again, coming in at just 3.4% for the September quarter.
Statistics New Zealand says that equals the previous low recorded in December 2007. In the June quarter unemployment was 4.0%.
The figures will keep pressure on the Reserve Bank (RBNZ) to keep raising interest rates. It hiked the Official Cash Rate from 0.25% to 0.5% last month and is largely expected to raise the OCR again on November 24 to 0.75%. Meanwhile, banks have been front-running the OCR increases by hiking mortgage rates in reaction to sharp increases in wholesale interest rates.
Capital Economics Australia & New Zealand economist Ben Udy said he wouldn’t be surprised if the continued lockdown in Auckland weighed more heavily on the labour market in the fourth quarter.
"But given the further tightening in Q3, the RBNZ is bound to determine that employment is now above its maximum sustainable level. With underlying inflation also above the RBNZ’s target in Q3, today’s data raise the risk of a 50 basis point [OCR] rate hike by the RBNZ in November."
ANZ economist Finn Robinson and chief economist Sharon Zollner believed the RBNZ could achieve a similar degree of tightening to a 50bp hike "with more optionality and less risk" by hiking 25bp and showing an aggressive forward track, and/or adding a January OCR Review into the announcement schedule, "which the market would quite rightly read as an 'in principle decision' to raise the OCR another 25bp at that meeting".
"All up, the RBNZ clearly has more work to do, but we suspect the picture will get murkier from here as the data flow becomes not only more volatile and noisy, but also genuinely more mixed.
"The housing market boom in particular is on borrowed time."
Economists had expected an unemployment figure of around 3.8% to 3.9% for the September quarter, while the RBNZ had shot for 3.9%.
Private sector wages rose 0.7% in the quarter and 2.5% in the year. That's just a tick above what the RBNZ expected and actually less than most economists forecast.
The seasonally adjusted underutilisation rate fell to 9.2% in the September 2021 quarter, while the employment rate rose to 68.8%.
The participation rate rose by 0.7 percentage points to 71.2%
The New Zealand Council of Trade Unions (CTU) said the unemployment data supported its view that NZ has a strong economy in which businesses and workers are showing their resilience to COVID-19 and the global economic outlook.
"Low unemployment, strong GDP growth, should be driving wages and the real incomes of New Zealanders workers higher," CTU economist and head of policy Craig Renney said.
"Now is the time for the government to be bold in its aspirations for the economy, in its aspirations for Minimum Wage changes, and to deliver on its agenda for employment relations."
Kiwibank economists said an extremely tight labour market can mean only one thing.
"Wage growth is set to rise ahead. We're picking wage growth will lift well above 3% next year."
The number of unemployed people fell by 18,000 over the quarter to 98,000, which, combined with 54,000 more people in employment, drove the unemployment rate down, Stats NZ said.
“The strong decline in unemployment brought the rate down to New Zealand’s lowest rate on record, matching December 2007, when it was also 3.4%,” Stats NZ's work and wellbeing statistics senior manager Becky Collett said.
“The fall in the unemployment rate is in line with reports of difficulty finding workers and high labour turnover, and continued travel restrictions on international arrivals, which put pressure on domestic labour supply,” Collett said.
Similarly, underutilisation, which is a broader gauge of spare labour market capacity, fell to 9.2% from 10.5% last quarter. As with unemployment, this has now reached lows last recorded in the December 2007 quarter.
In addition to people who are unemployed, underutilisation includes people underemployed (those who are employed part-time yet want and are available for more work) and people who want jobs but are either unavailable to work or not actively seeking work (the potential labour force).
"...There were a greater number of jobs getting large pay increases as businesses attempted to attract and retain staff in an increasingly tight labour market,” Collett said.
The strongest contributors to the annual pay growth this quarter were construction, education and training, and healthcare and social assistance. Also, many public sector collective employment agreements currently in place will continue to affect annual wage inflation throughout 2021 and 2022.
Unemployment
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Alternatively the employer goes broke, or starts charging 2-5x the normal price to maintain operation (hyper inflation) to make the new payroll. This only banks and the speculators leveraging printed cash win. Everyone else gets screwed, especially the retired and not asset holder.
Heart bleed indeed. $100 coffee and donut anyone...?
Should be raised by a full 100 IMO. With further smaller raises after. When inflation starts to run away, you really want to stomp on it, else it will go faster than you can control.
But you are right, Orr won't do it because it would crash the housing market... but he might do it, so he can crash the housing market, then sail in and bail them out with oodles of printed money.
So all the billionaires in the world aren't really billionaires because they don't have billions in "real money" under the mattress?
Things like property and shares are generally better than "real money" Money in the bank or under the mattress is just numbers on a screen declining in value daily.
Correct, they aren't, unless they have it in cash. Which they can readily convert for most of their shares etc, so it's just semantics. However the above poster is correct still. The difference with real money vs imaginary monetary value is that you can use real money to buy anything you want, right now, because it's a recognised form of exchange backed by the country you are based in.
All of the indicators are fast proving how wildly out of touch with reality the RBNZ has been with forecasting the impacts its policies have had. With the RBNZ so far behind the curve, due to their reluctance to remove the emergency policies/rate settings, its going to result in a far sharper shock to the households and create a lot of pain that could have been avoided.
It's all in how it's measured, all OECD Govt's fudge the figures to suit their promotional purposes. For eg. only those who are "actively looking for work" are classified as unemployed, but lockdown conditions make this impractical.
For reference, the ABC has just had a series of articles exposing Australians unemployment calculations; I've never seen anything similar from NZ media however our criteria are aligned.
Meet the millions of people who aren't employed, who aren't considered 'unemployed' - ABC News
Why doesn't the unemployment rate make sense? Because it's not designed for you - ABC News
Why are millions of unemployed people excluded from our monthly 'unemployment' data? - ABC News
Spot on. Even shows the same diagram as this interest article, but unlike them, they explain what, 'not in the work force' means.
Also, there are many many SME businesses and their staff in the 'employed' category that are still only there because of Covid subsidies, remortgaging their home, using retirement savings, including Kiwisaver etc. They are employed in name only.
If we have ever wondered where the sayings:
'The first casualty of war is the truth,' and 'Lies, damn lies and statistics,' 'How can you tell if a politician is lying?' comes from. Now we know.
I've said it before - if we were getting this sort of data as a downside miss, say unemployment higher and CPI lower than expected, we would be getting emergency interest rate cuts of considerable magnitude. He would not hesitate to cut by 50 or 75 bps and even do it outside of a scheduled meeting.
My question is, where is the symmetry?
What does the OCR and Auckland have in common? It’s a bit like Auckland snap lockdown circuit breaker really, sharp into level 4, out of lockdown seems long, drawn out, cautious, slow, with a lot of ummm ing and ahhhh ing while everyone in Auckland suffers, can’t go to the dentist, can’t see a doctor, can’t go to school etc etc etc
Agreed. Ōtautahi was originally the name of a specific site in central Christchurch, a kāika situated on present day Kilmore Street near the fire station.
It means the place of Tautahi and was adopted as the general name for Christchurch in the 1930s. Prior to this, Ngāi Tahu generally referred to the Christchurch area as Karaitiana which literally translates to Christian
Interesting.
Sounds similar to Aotearoa which was only used well after European settlement and referred to the North Island only.
The treaty and the declaration of independence both refer to Nu Tireni as NZ. There is no reference to Aotearoa at all.
Yet some seem to believe it was just renamed NZ.
That's right, in the case of AKL, if the broader area was called tamaki makaurau, then so be it, and that is fine to use if you really want to now days.
But the city that is Auckland was never tamaki makaurau, because before Auckland there was never a city there at all.
City or no city by definition, there is no doubt what is there now is completely different from what was there previously, so I wouldn't call it outrageous for it to have a different name.
Also Auckland was obviously much smaller when it was first built, so why would they use the name Tamaki Makarau, if that is the name for the wider area when they named it?
Well who would have thought that the silly old public didn't opt to create a 'business' or keep a failed one on life support to get some of that $17 Bill in wage subsidy - instead of getting on a benefit.
The UE is coming and here....just hidden with govt subsidies.
I am pleased that unemployment is so low and wages are rising so much (albeit below inflation still).
For years employers have relied on exploiting migrant workers to take on back breaking work on orchards paying them barely the minimum wage. They would moan that they would love to hire kiwis but that they just "don't want to work".
Well the reality is that yes Kiwis do want to work, but they don't want to be exploited, they want to be paid what the job is actually worth!
Its hardly exploiting.. its a choice. The immigrants came here to improve their lives, and in doing so benefitted the employers as well; by not having to deal with more entitled kiwis who over-estimate their value in the world. There's a burgeoning group here who need to wake the F up and realise they aren't special and if you want to succeed - shut your mouth and get to work. The cream rises to the top (well in a decent non-socialist society anyway)... Darwinism at its finest
The cost of your rent has precisely zero bearing on the value your labour brings to your employer.
I'm not saying life's a dream, but the value of labour is over-estimated in this smug hermit kingdom. In large part because the government bureaucracy pays stupidly high salaries for low production, and crowds out private sector.
Just a bunch of diamonds hidden in the coal waiting to be discovered huh? If people are worth more, and ask for it with confidence, they get it. A valued employee doesn't need the nanny government to choke off competition to give them an inflated sense of worth - employers fight to get them and keep them.
A few questions for your example.
Why is someone making minimum wage living alone in the average rental property? Wouldn't that be a 2-3 bedroom house? If they have a flatmate their bill drops to $250/week. Two flatmates and it's only $167/week. If they have a partner then they will also either be earning or claiming a benefit. if they have children as well, more benefits.
Paid what the job is worth?
Doesn't happen in NZ as we have minimum wage and the need to compete with the welfare system.
I suspect you are confusing paid what the job is worth with paid what the employee would like to have for a lifestyle he/she thinks is deserved.
With 359,493 on various benefits as at 30 September 2021
https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/s…
The trouble with low unemployment is the dregs get jobs out of employer desperation and customer service levels go down the toilet. Compare with the typically outstanding customer service found in the USA where jobs are uncertain and government handouts are tenuous.
How about proving your worth to the business before putting your hand out? The employer is not your mother, you are not special, and the world does not owe you a living. The strong thrive - the weak perish. Its a beautiful system. Take away the safety net and watch the change in attitude.
Correct - nobody owes anyone else anything and competing for quality staff in skilled jobs is entirely natural.
What's unnatural is fighting for lower skill staff at higher and higher prices when we have vastly more productive workers wanting to come here who can't. Where's the incentive for kiwis to upskill? Just continue being slack and getting pay rises.
The poor will be enthralled with wage rises thinking they're winning - yet inflation will eat it and then some in real terms. All the while NZ slips into being less and less competitive internationally.. Short term - higher wages, longer term - mechanisation and offshoring of roles.
You think this is winning against the business owners? Its going to hurt the vulnerable the most. The strong adapt, the weak perish. As always.
An endless supply of cheap labour from abroad stifles innovation. It's a cop out. Let's pay more and innovate.
As much as I hate this government and the lockdowns, forcing businesses to price labour by local and not global standards is a good thing. If unskilled labour is getting too expensive, innovate or perish.
It's good that we have unstaffed checkouts in supermarkets, fast-food joints and garages. I like seeing that investment. It's much better than paying minimum wage to an unskilled immigrant that's prepared to live in poverty for a few years.
I’m absolutely a fan of pay rises for improved productivity - but less supportive of pay rises for the sake of it “because I’m worth it”
How about upskilling and bringing more value?? No - I’d rather play the victim and wait for someone else to do it. Then when I fail I have someone to blame… sob sob.. woe is me
farmers are classic at this, robot milking systems were created here years ago, i told my brother whom was a farm manager at the time watch out you will lose that job one day when we saw it at field days, and yes he did lose that job but not to technology but to cheaper import farm workers (he had been on the farm for 20 years) so he went to australia for better wages and conditions
the importation and exploitation of workers has stymied innovation and progress in NZ for years we are way behind many western countries now, the industries that have benefited from mass immigration of people has been housing and banks and is it not strange that the people that were in charge of those policies are now knee deep in those industries
Maybe you are reading it backward, if not for cheap imported labour, NZ Inc would have needed to cease operations long ago, as the added value of its exports does not justify high per head wages for NZ as a whole.
What stymied innovation and progress in NZ is its economic model, how much more "innovation and progress" you want in primary industries? I am 100% sure NZ is already a top "innovator" in primary industries.
We might be a top innovator, but our government drags down that innovation at every turn. They pump out low skilled immigrants and give hardly any support to what would be massive innovation leaps for our primary industries (see Halter, the robotic picking outfits, the tiny funds they give for seaweed research/production for lowering methane emissions, the struggles companies trying to create biofuels from left over forestry products have etc etc). The government isn't interested in supporting productivity in this country, because they are so caught up in their own ideology, which mostly revolves around making more excuses why nobody can build houses, giving landlords massive subsidies and chasing the next photoshoot. But keep voting for populist air heads who lack real policy and that's what you will get.
It's a shame though that the "strong" you talk about are more likely these days to have started halfway to the finish line. In this situation even being the fittest doesn't mean you'll win the race. These days you're more likely to win the race just by sitting around on assets than by income from working hard.
Perhaps it appears that way, but lazy wealth creates lazy minds. A day of reckoning is approaching, and if all you know how to do it buy and sell property a protracted downturn will surely hurt. Suffering is the only true path to personal growth (in my view). The fitness you speak of could be thought of less as financial equity - and more of attitude, risk tolerance, nimbleness and self awareness. These are the people who thrive in darker times. Personally I look forward to a NZ focused more on innovation and entrepreneurship; less on speculation and virtue signalling.
I would love NZ to become more focussed on innovation and entrepreneurship but I'm not convinced it will happen. In 2001 we had the knowledge wave conference and it was inspiring at the time. Here's a speech from Helen Clark https://www.beehive.govt.nz/speech/opening-speech-catching-knowledge-wa…
The conference was quickly forgotten about and we turned to the property market for wealth instead of the innovation they were intending.
Government involvement is the first sign of trouble .. the only thing the government needs to do is get out of the bloody way.
Same with the property market.. in a truly free market real prices fall - not rise - as greater and greater efficiencies are achieved.. but that’s not politically palatable of course
To create more of Xero doesn't require a heap of home grown computer science grads - its needs more of Rod Drury. The coding skills can be imported, the captain is the important one. These people don't come from academia - they come from a place of hunger, drive, self awareness, observation, quiet thinking and analysis, team building and risk taking. These traits aren't taught by any government institution - quite they opposite - they are oppressed by it.
Not quite. Governments have a real role to play in giving these promising companies two things - startup grants (which Xero didn't have for the first couple of years, but then got, it was run out of an apartment on Willis St where they would steal the internet from the cafe across the road, employees would time their coffee runs throughout the day to get more internet) and as a customer. FOR INSTANCE: Halter - would improve dairy industry and probably beef productivity by anywhere between 10 and 40% as reported by early adopters. Government, if they had any sort of brains, could dramatically subsidise the rollout of the technology for farmers all across the country by giving away free collars. Would cost a few billion, but would make the industry so much more efficient, it wouldn't be funny (no need for dogs, fencing, lame detection, efficient stock management, integration into regulatory systems for animal tracing etc). Seaweed farming - it's already proven that it lowers cattle emissions hugely. Where's the mass rollout with government support? They have given something like $10m so far, which should be in the hundreds of millions becoming major supporters because the cost for us in the future is 10s of billions for not meeting our climate commitments.
Great idea - though I'm unsure which handouts you see in this country... if its the wage subsidy etc then dream on. This is a token payment to try and mitigate the government's unnecessary interference in private enterprise with lockdowns.
Question - if business is so bad, who will pay you when we shut them down and leave? The government? How will they pay you when they have nobody to tax? I guess you can all sit around in grass skirts cooking over a fire - rejoicing in the wonder of your new found equality
Start with this one: https://www.beehive.govt.nz/release/business-boost-transition-new-covid…
$43,000 per fortnight per business as a "Resurgence Support Payment" for businesses who are considered viable! If the business is so viable then why do they need a payment that annualises out to over $1 million per business per year! The Government should be demanding to own shares in each business they pay this support to and to receive a fair share of that business's profits as well in exchange for that level of assistance.
I don't want to shut down business, there are plenty of great business people out there that work hard and pay their employees fairly and doing a good job. But if you're arguing that Government "handouts" to poor people should be tenuous, then I would say that business owners need even less help.
Don’t get me wrong - every private entity should live or die on its merits.. but don’t hold a gun to a businesses head saying - “you cannot trade until we say otherwise at some unknown subjective date in the future” then have the temerity to say “what’s wrong with you? why can’t you survive? What a loser needing government handouts… Tut tut”
All we want is to have a clearly defined rule book based on personal liberty and choice - and for the referee to get out of the bloody way. $43k might sound like a lot in your example but it’s pitiful compared to the damage inflicted.
Entertaining socialism in this country is a luxury afforded to the current generation only after having enjoyed the benefits of capitalism.. and now you would have us kill the golden goose it seems.
All we want is to have a clearly defined rule book based on personal liberty and choice
Sure, but why should only those things go in the rule book? And why do you get to decide what the rule book is based on? Someone else might think personal liberty is overrated and want a clearly defined rule book based on justice and fairness. Or a clearly defined rulebook based on wellbeing and kindness. Not saying those are necessarily better - just that there is no reason to think you get to have the final say on what the rules are based on.
Liberty over fairness - the age old right v left.
It comes down to personal boundaries..
With liberty I demand freedom of choice - and I defend your right to it too.. I’ll not force my beliefs on you and expect reciprocity. Win / Win. We can debate and ask for things of each other - but not demand.
With fairness - I don’t want to give you half my money but if you deem that your need is greater than mine you just take it. Win / Lose
And if you don’t value liberty - perhaps go find someone to attach to - just don’t make the rest of us do it because of your values.
In society if a group of like minded “fairness advocates” want to pool resources and live in a community to follow their values - I’m all for it. But it should be each persons choice to join in. Don’t force others to join in against their will to make you feel better.
Back to your point - who said only those things are important? I’m not suggesting the “rule book” be prescribed by me - nor that only liberty is important. Rather I would hope any rules are clear, respect personal freedoms, and are reasonably enforceable. If we know the rules we can work out how to play the game. The speed with which the rules change these days is closer to “Squid Game” than prudent governance.
This is a token payment to try and mitigate the government's unnecessary interference in private enterprise with lockdowns
If you want to describe the wage subsidy that way, then you can also describe other benefits in that way too. The unemployment benefit? It's a token payment to try and mitigate the government's unnecessary interference in the employment market (remember the government doesn't actually want full employment - that's why when unemployment numbers get too low they get worried at start doing something about it). The accommodation supplement? A token payment to try and mitigate the government's unnecessary intervention in the housing market (etc).
Remember businesses also get all sorts of support that aren't in the form of direct monetary transfers. Like a functioning legal system, so people can't just nick all your stuff with no consequences. Roading and other infrastructure. Workers trained in particular skills in government subsidized institutions. Focusing just on direct transfers of money really misses a lot.
Some good points there.. and I agree about benefits and accommodation supplements.
Of course there is a cost to operating a country and we all benefit - not just business. We need a justice system and roading infrastructure etc and a modest tax is necessary to facilitate these.. but what business needs most of all is a clear set of rules they can operate by - as investment horizons can be lengthy. These lockdowns have had an asymmetric impact on business… bureaucrats still get paid - beneficiaries got a pay rise - but it’s the private sector who suffers.
If you give us a sensible plan, metrics to go by, timelines, milestones.. we will modify the approach and get down to work.. but we can’t operate when those in charge change the rules arbitrarily, single out individual sectors for pain, and smugly claim “what’s wrong with you?” Pretty sure that’s how they interrogate prisoners…
Hardly a sound way to move our economy forward.
Couldn't agree more Roark78! Having lived and worked in the US for around 6 years in the late eighties/early nineties I totally agree regarding customer service. Amazing! I remember being perplexed for some time as to why people were very reluctant to discuss their jobs with me. As I started to understand the workplace more I realised that employees jealously guarded their jobs because in most instances there was very little job security. The employer could fire you for looking at them sideways and march you out on the spot! Also gaining medical insurance through the employer was a huge issue for employees. This all meant that employees worked really hard and were very loyal to their employers. Also most employee's only received 2 weeks annual leave!. My contract gave me 4 weeks and my American boss could never get his head around that! Imagine the howls of protest here if that was the case!
I'm not advocating the US way as being correct or fair, just that the employer - employee relationship was more connected.
Its not meaningless, it is an indication of how tight the labour market is. If they included people that don't want to work then you would not be able to tell how hard it is for businesses to employ people and the potential wage inflation effects, which is the exact purpose of the statistic.
There are many people that are not working by choice. You can find a breakdown of them here (from 2016 but it has not changed greatly):
main-activity-of-people-not-in-labour-force.pdf
Most common is voluntarily not working (called free-time activities) e.g. retired (including early retirees), travelling. This is followed by studying, housewifes/househusbands then looking after children.
Well, each time a statistic like this comes through...yes.
Although not really 'nervous'.
I still think taking the OCR to 1.5-2% will take a lot of heat out of this economy, and will be sufficient.
But if I am honest, I am less confident of my prediction than I was. Time will tell.
There is a robust connection between the change in the unemployment rate (especially below a certain rate) and the change in the real value of money spent on employee compensation. However this does not correlate that well with consumer price index measure of inflation.
Yet more lies, damn lies & statistics to meddle with our simple minds. It is very hard to believe anything from our govt & its agencies these days & getting harder by the day. I suppose I'm naturally political by nature but have really struggled to follow anything from any colour on the current band. They're all full of s...t & I haven't yet started on the msm. Another day.
No. Investing in software to reduce reliance on spiraling wage costs. Everyone is doing it, and adopting software that drives automation. Larger. Corporates have teams doing this Seen any of Teslas car building plants lately...lots robots, very few humans.
Bottom line.... more robots and software, less jobs. Happy now?
Turns out the figures are most likely not even correct anyway, as for the last 5 years there has been a big divergence between job seeker benefit numbers, and unemployed numbers.
Which there never used to be before, so the figures are looking very fishy,
https://www.nzherald.co.nz/nz/politics/as-many-as-45000-missing-from-un…
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