Unemployment has very surprisingly, risen to 3.4% from 3.3%, while private sector hourly wage growth has slowed to 8.1% from 8.6% when it was expected to rise.
The New Zealand dollar dropped by about a third of a cent against the US currency on the news, while wholesale interest rates dropped also. The clear implication for these movements is that 'the markets' are now seeing the prospect that our interest rates here may not now be hiked by as much in coming months as previously thought.
This data for the December quarter 2022 is according to Statistics New Zealand and is frankly so far from expectations that there will be questions as to whether this is a 'rogue' result. If it is not a 'rogue' then it indicates a significant turning point.
To be clear, the expectation is that the unemployment rate will rise this year. The Reserve Bank sees it reaching 4.8% by the end of this year. However, this rise has come earlier than expected. There were no indications ahead of time that the rate would rise.
The data matters because it will be a key input into the Reserve Bank's next decision on the Official Cash Rate to be made on February 22.
The RBNZ had previously indicated it would raise the OCR (currently 4.25%) by another 75 basis points but this data would cast a lot of doubt on whether that should be done. The marketplace will for sure be pushing for a smaller 50 point rise now, or even 25 point.
Indeed, BNZ economists were quick off the mark to say that in light of Wednesday’s labour market data, they had decided to lower their RBNZ February call to a 50 basis point hike (from 75).
"The weaker than anticipated Consumer Price Index [for December, which was an annual rate of 7.2% versus RBNZ expectations of 7.5%] increased the odds that we would shift in this direction but we feared that labour market data might suggest otherwise," BNZ head of research Stephen Toplis said.
"As it turns out, labour market figures were slightly on the softer side of our, and more importantly, the RBNZ’s expectations so we are responding accordingly.
"We have also lowered the peak in our cash rate track to 5.0%, from 5.5%, but we still do not believe the RBNZ will be easing until 2024."
ASB senior economist Mark Smith said the risks were now skewed towards the RBNZ having to hike the OCR by less than previously thought.
"The need for outsized OCR hikes also looks less urgent. We now expect the RBNZ will hike by ‘only’ 50bp in February, though it remains a fine line between that magnitude and a 75bp increase. We still expect a further fine-tuning hike of 50bp in April, to an OCR peak of 5.25%.
"With the greater potential for the labour market to loosen, we also expect the RBNZ will eventually cut the OCR from Q2 [second quarter] 2024, a few months earlier than previously forecast," Smith said.
The RBNZ had expected unemployment to drop to 3.2% and this was widely expected among other economists too.
On wages, the RBNZ had expected the private sector hourly growth to increase to 9.1% - but it has come in at just 8.1%.
Taken at face value these actual results would suggest that the huge interest rate hikes the RBNZ has already made are starting to have significant traction and perhaps earlier than expected.
Among the details of Wednesday's data release from Stats NZ, the 'underutilisation rate' — a broader measure of spare labour capacity which includes those unemployed, underemployed, and the potential labour force — rose to 9.4%, from 9.0% in the September quarter.
In the December 2022 quarter, the labour force 'participation rate' remained at 71.7% and the employment rate remained at 69.3%. Both remain the highest rates recorded since the Stats NZ began this particular data series - the Household Labourforce Survey in 1986.
In the December 2022 quarter, there were 4,000 more employed people, up to 2,855,000. Annually, employment increased 1.3%
In its media releases on Wednesday Stats NZ noted that: the Household Labour Force Survey (HLFS), Labour Cost Index (LCI), and Quarterly Employment Survey (QES) "continue to experience data collection challenges".
"These resulted in lower response rates than originally designed for in the December 2022 quarter. Despite lower response rates, we remain confident that the data is fit-for-purpose for New Zealand’s official labour market measures."
Unemployment
Select chart tabs
130 Comments
WTF are you smoking bro!...
The missing " leg" to a full on depression was unemployment rising!...
Here. It is ..
All facets are in play...
Unemployment
COL
Inflation
Retail spending
Labour still in power
Housing supply growing demand dropping
New taxes coming
Fuel subsidies gone
Insurance rates to rise .
It's the perfect storm.
thanks Orr and Ardern
Hemi,
"Housing supply growing" So, in your 'expert' opinion, that's the government's fault. Silly me, I thought it might be a good thing to more houses being built.
There are plenty of things this government could have done better, but to blame them for more houses being built is surely not one of them.
The fuel subsidies haven't gone and I would like to know which new taxes are coming along, though some form of capital tax should be on the agenda.
In what way is the government responsible for rising insurance rates?
In short, all this post does is illustrate your extreme bias.
Chap ... Timing bro is everything.. as you will learn one day!...
When the homeless and poor needed houses ( and stock of existing houses was low (20,21) Ardern's mob were missing in action!
Now, when stock/ supply is high we have record numbers of new build's available flooding the market and at the same time the RB reacting to the government's fiscal drag. All creating this big over supply in a low demand market soooo .. we have a economic government induced cluster;!!!
Comprehend the big picture now brah 🤙 your lot haven't a clue which is why the market is like a mad person's crap!
On the insurance rates..
Government funds national and council infrastructure poorly!
Bad roads stuff cars and cause accidents which results in claim
Bad drainage flood's house
Cause and effect! Study it bro!
When infrastructure fails people's property gets affected and they claim through insurance companies!
They inturn put up rates to cover loses of profits
I'd say it is more natural disasters becoming more frequent than planned is the cause for increase in insurance premiums if i'm honest. Nelson got approx the same amount of rain back in August as Auckland just did, and they had slips, road washouts, housing claims like everywhere than gets flooding. Also bare in mind multiple insurance companies in NZ may be with the same re-insurers therefore premiums go up for insurance companies, premiums go up for clients. Insurance makes montey off of nothing happening, however when big things happen that effect many and drain their pockets, you can bet that they will be recouping this from the clients such as you and I.
https://nzhistory.govt.nz/keyword/floods
What information do you have to back this statement up ref more natural disasters?
From what I can see it happens every 30 years, we don't learn from mistakes around the country and design for a 1 in 50 year event which is minimum.
But prove me wrong as I'd like to understand your comment.
This aged quick.
https://www.rnz.co.nz/news/political/483438/chris-hipkins-confirms-fuel…
Not sure if we can blame Ardern for all this. I guess Judith's lot would of been more fun tho...Ross, Muller, Falloon, Uffindell!!
On Stats Page
Data quality updates
The Household Labour Force Survey (HLFS), Labour Cost Index (LCI), and Quarterly Employment Survey (QES) continue to experience data collection challenges. These resulted in lower response rates than originally designed for in the December 2022 quarter. Despite lower response rates, we remain confident that the data is fit-for-purpose for New Zealand’s official labour market measures.
Shock unemployment rise
Unemployment has risen from 3.3% to 3.4%
Is that meant to be a sarcastic headline ? A SHOCK increase of 0.1% ? (to be clear that's a SHOCK increase of 1/1000)
I certainly haven't noticed any change in how difficult it is for us to find staff, it's almost impossible.
Bloomberg consensus forecast (14 local instos) was unchanged at 3.3%. It doesn't feel like the labour shortage has eased and the participation rate is very high still. Anecdotally, only one of 6 cafe's open for breakfast in Franz Josef due to staff shortages. Re-roofing the house, that will be a 9 month wait. Buying groceries now, fruit and veg and building supplies should have a live pricing ticker the prices are so volatile (mostly higher).
... I am shocked that you're shocked , David ... we've had massive increases in the OCR , shockingly big 75 points rises ... plus a series of polls showing shockingly depressed business confidence ... a government in crisis , moderated briefly by Ardern's shocking departure ... the increase in unemployment doesn't shock me in the slightest ...
It's insane, but statistics get interpreted relative to predictions, not objectively and within context. Even worse, they get interpreted relative to economists' predictions, and we all know how accurate they tend to be.
The RBNZ was picking a fall in unemployment to 3.2%. It came in at 3.4%; a tiny 0.2 percentage points higher than expectations, and only half that amount above the last print. This minor increase was enough to move markets, not because it was significant, but because it differed from economists' predictions.
It's like how election polling can influence the final vote. Economists' predictions can't influence the stats, but they can influence the market's reaction to them. This ability is perhaps even more significant than the stats themselves, and I would be surprised if predictions are not being tailored for this purpose by economists themselves.
is frankly so far from expectations that there will be questions as to whether this is a 'rogue' result
Looks like a ploy from RBNZ & RBA where inflation forecasts are unnecessarily overshot, so the actual number comes as a downward surprise for markets and takes pressure off their rate hike decisions.
Back in November 2022, RBA delivered a 25bp hike claiming inflation had peaked. A few weeks later, it contradicted itself by expecting inflation to rise from 7.3% to 8% and celebrated the actual number coming out lower than expected at 7.8%. What a scam!
in the sporting world it would be the equivalent of a manager having a target to win 75% of games. But winning only 50% of games one year and then celebrating the next year when they improve and manage to win 51% of the games... imagine if the private sector did that (bankrupcy!)
A target of 3% inflation means only celebrate when inflation is below 3%. And if the RBNZ had real character and empathy then they would say they wouldnt be happy until inflation runs at 1-2% for a few years to get prices down to where they should have been, so the poor can finally catch up.
Better still - weekly earnings were up 8.6%. Looks awful that number of hours worked grew at 3x rate of employed persons and paid hours grew only 2x.
In my broader industry (infrastructure), people are happy to do longer hours to get through their immense workloads and many semi-retired part-timers are switching to full-time work as well.
Are wages up or are the people that are left working due to staff shortages just doing more hours ? Should imagine its pretty hard to pull the data required. Never received an 8% wage increase in my life unless it involved changing jobs. By the way its never difficult to find staff, if you pay the right money.
I've had decent bumps as promotions. But the underlying wage growth at the time made those bumps in responsibilities far less rewarding than they seemed at the time. Charted against the growth in the minimum wage, some people will have had very little actual wage growth at all as their careers have progressed.
https://www.stuff.co.nz/national/300766975/firefighters-accept-pay-rise… Firefighters accept pay rise up to 24%
Ask me again in 2026 ;-)
Got the idea from a Tony Alexander newsletter. Well worth the $100/yr subscription. I have a few million in debt and I think it's saving me about $200K pa, which is going straight onto principal to try and get ahead of the increase in a few years.
Probably need to look closer at why they cant be fussed. Its because the government isnt fussed to push anyone to work or skool when it means they might lose votes.... even if it is selling our future down the pan: I was interested in truancy recently so had a quick look up and was shocked to see the numbers and simple legal solution that isnt being used.
Here is the law designed to make sure parents are incentivised to get their kids to skool
Under the Education Act 1989, any parent whose child does not attend school as required commits an offence and, if convicted, is liable for a fine not exceeding $30 for every day the child was absence, up to a maximum $300. A second conviction for the same offence can see a parent fined $3000.
Although this is always a last resort option, 42 parents and caregivers have been prosecuted over the last few years.
And here is the number of truants who should be fined $3300+ (which would get kids moving in no time)
In the first term of this year, just 46.1% of students regularly attended school, with nearly 7000 classed as persistently truant. Māori are over-represented in the Ministry of Education figures, with 67.2% not regularly attending
Only 27% of Maori children attend school regularly. https://figure.nz/chart/ArLDOAkWunBAKJWj-VmMM6xKpZpT1Hkea
But when they grow up and become welfare dependent, or can only get low paid work as a result of having no education, they blame racism and colonialism.
It may be a leading indicator of employers under financial pressures as work dries up. Mate who runs a high-end restaurant in lower North says he has maxed out on price increase and will be forced to put in more hours himself and cut staff hours if minimum wage goes up again in April 2023.
Maybe first we should try treating our existing health professionals better instead of doing everything that we can to insult them, under value them, and generally piss them off so that they leave for overseas. They are far better than who we are replacing them with (if only from cultural understanding alone) And the countries where they are going know their quality and are pushing to get them with transport costs, sign on bonuses and generally far higher wages and more affordable houses. Dr Verall has a big challenge and a lot of damage to undo. It is going to take a whole lot more than just words.
I do not think that any of the political parties are serving the public who elect them. They are serving some other shadowy master.
Democracy is totally stuffed, not just here but in a lot of other countries also. What do you think that the ultimate consequences will be?
Yep. When there are no other choices that is all that there is left short of rebellion. I wonder how bad things have to get before that happens. I suppose that they have that point well calibrated and ensure that with just enough latitude and various benefits, they can hold a large proportion of the population as dependent tenant serfs without risking any violent backlash.
https://tradingeconomics.com/new-zealand/population
National certainly opened them in 2014 and despite all the empty rhetoric from Labor nothing changed until Covid. In fact the worst year was under labor in 2019. I expect that both parties have ambitions to pick up where they left off.
Young Kiwis are mad staying in NZ competing with minimum wage immigrants. Those that do stay are probably not that smart and of questionable value.
What wankery. Plenty of people stay close to NZ due to family, access to medical care or because they want to start a family sooner rather than later.
The idea that all of our 'best and brightest' leave and the ones that stay behind are of 'questionable value' is one of the stupidest things I've ever read on this website. If you have to resort to such ridiculous claims to boost your own ego because you're one of the ones who have left for greener pastures then maybe you aren't as valuable as you think you are.
Not sure any of your reasons for staying in NZ are particularly valid. Australia is literally a 3 hour plane ride away, you can pop back every weekend if you like funded by the extra money you would receive courtesy of Australia's higher wages. NZers get free medical care in Australia as they are covered by Medicare, and likewise NZers qualify for Govt baby benefits and maternity leave so you can still have a baby whenever you like. And at least you can still get a real obstetrician in Australia, unlike NZ where you are stuck with a 18th century basket weaving witchdoctor.
Record immigration numbers (as measured by the number of visas issued) occurred under Labour not National. The only reason why net immigration figures have not hit record numbers (pre-covid) was that the number of people leaving the country also increased. https://www.interest.co.nz/property/101709/work-visa-numbers-are-rising…
If you think voting Labour means less immigration, you have been misled.
Maybe first we should try treating our existing health professionals better instead of doing everything that we can to insult them, under value them, and generally piss them off so that they leave for overseas.
YES. They have already been gagged by the MoH from 2020 onwards, touted as heroes then vilified when it suddenly takes 3 weeks to get in to see a GP. So many burnt out, left back overseas to their home countries, invested in scanning (MRI etc) with surgeons then retured and living off the kickbacks of surgeons referring to their own private practice for imaging, many NZ graduates leave for overseas as the pay is simply magnitudes above NZ, and we are considered lucky if they return. Society used to value educated health professionals above most professions, perhaps this added to the allure of university hopefuls at school, now it feels like the powers that be simply want them to do more instead of tacking the main issue which is the level of educated health professionals (multiple sectors, psychology and psychiatry for mental health as an example).
Don't forget all the top students who can't even get into medical school these days because they are the wrong race. The standard of health care professionals is rapidly declining as all these unqualified students get pushed through the system thanks to lower standards to ensure they all pass. Presumably these top students now go to medical school in Australia or other countries.
The good news for anyone who loses their job? The jet-setting Williams Corporation lads have you covered https://www.williamscorporation.co.nz/williams-academy
Be quick, the 30% of staff they just laid off will have had a head start!
https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/76…
$7.3m of investors money withdrawn since Friday.
Edit: as Hemi has spotted below, another $1.3m has been withdrawn in last couple of hours. I hope they are selling houses this fast.
Nicely spotted! Yip they're off! https://app.companiesoffice.govt.nz/companies/app/ui/pages/companies/76…
Don't forget this is all intentionally "Engineered" by the RBNZ, they actually think more unemployment is a good thing. Ok so I admit that I have what appears to be pretty weird logic at times according to people on here, but I'm struggling with this concept. Does it just make the numbers look good for one part of the problem and just shift an even bigger problem elsewhere with an overall net detriment to society ? ?
Not a shock to me at all. The economy is face-planting, people just haven't spotted it yet because they are looking in the wrong places - at lagging indicators rather than leading. For example:
- Annual change in current account balances turned negative in September 2022 and this indicator is now plummeting - a combination of people spending more money than they are earning and those with money sticking it into term deposits. Demand is collapsing and will drop further
- Broad money (current accounts, savings, and term deposits) increased by under 2% year-on-year to December 2022. It has only been this low three times in the last 30 years - 1992, 1999, and 2009 (all vintage years!!!)
- Interest payments are escalating quickly ($10bn last quarter) - and we have tens of billions of mortgage dropping of fixed rates in the next few months. With higher prices in the shops, and less money in pockets, the situation is perilous
- Now - let's nail the wages are booming myth. Earnings per filled job increased in real terms (adjusted for CPI) from post GFC onwards. The same can be seen in today's report on weekly earnings (QES). Real wage growth stopped in mid-2021 and has been basically stagnant since.
See you on the other side.
It’s a good point and I agree. A lot of people here are willing interest rates on, as they want the property crash to be as big as it can be. I ‘get’ the sentiment given how ridiculously high prices have gone, and the way that has locked people out of home ownership.
But it makes for some unbalanced and non-objective opinions, that’s for sure.
At the same time, we have seen the mirror image of this mentality from some property bulls here over the last few years. Ie. A completely non-objective and vested interest view that prices won’t fall, or at least not by much.
nytokyo,
"there is broad anti-property sentiment". I don't think that's the case, but that doesn't matter. What does matter is that the NZ property market is absurd/insane, choose your own description.
We are have become one of the least affordable property markets anywhere. What makes that rational? It's certainly not based on our superior earning capacity, so why? Well, for one thing, the tax system favours property as an investment-though a little less so right now- while a whole generation were put off the stockmarket by the '87 Crash which passed almost unnoticed in the UK and US.
From the perspective of NZ Inc. this is not a good thing. We can't get rich just by selling overpriced and all too often poorly built houses to each other. We still have a low debt/GDP ratio, but our private debt is high by global standards.
In my view, there should be a 'broad anti-property sentiment' so far as investment is concerned.
I am not surprised either. I was going to post that I thought unemployment would rise not fall, but didn’t- mainly because I don’t trust the integrity of the statistics enough.
The slump has started, there’s real signs in the construction sector. As I said yesterday, the floods will provide short term support for builders and tradies, but on the other hand the crash will be exacerbated in the second half of the year.
So unemployment won’t go up as quickly, but will end up rising more than it would have.
What a crock. 24% in two years.
RBNZ aren't likely to consider unemployment an issue until it gets to above 4%. That's neither one way nor the other and may well be noise in the data.
However the wage data is a big concern because if consumers are financially stressed they stop spending and it can take years for them to start again.
I'm not shocked, but I am appalled. https://www.youtube.com/watch?v=gbJfRe6iGlo
Rogue result, maybe to those in protected towers who walk backwards. I am seeing it where I am. Small businesses reducing headcount, considering who they hire favouring those who will come without cost complications. And forget wage rises, boss can't give so employee will have to choose.
Dear Liam at Granny Herald quickly in to spruiking mode:
https://www.nzherald.co.nz/business/respite-from-interest-rate-hikes-lo…
The Auckland flood is going to send inflation to the moon. Ruined food crops will see fruit and vege prices at records, extraordinary demand for new and used cars to replace flood damaged ones, replacing household furniture and furnishings - and if you thought it was hard to get a tradesperson before, well just try getting one now. So whatever the RBNZ does in the next couple of weeks will be nothing compared to what it will be forced to do in a few months time.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.