Job ads, which had been running hotter than hot, have declined for the fourth month in a row and are down by about a quarter on what they were a year ago - suggesting that the expected sharp cooling in the labour market is under way.
According to the July BNZ & SEEK Employment Report, SEEK job ads fell 3.9% in July on a seasonally adjusted basis. That is the fourth consecutive monthly decline, and Job ads in July were 25.8% lower than a year earlier.
Auckland job ads are now running at lower levels than before the pandemic.
The NZ jobs market has been searingly hot as employers struggled to fill vacancies during the pandemic when the borders were closed. Employees have been able to claim wage rises to meet strong inflation.
The unemployment rate has been well under 4% for over two years, having dipped as low as 3.2%. However, in the June quarter it blipped up to 3.6% from 3.4%, despite very strong employment levels, with 28,000 more jobs filled in the quarter.
But the borders are open again and migrant workers have been flocking in - soaking up much of the previously unmet demand for staff.
The Reserve Bank, which needs to see 'slack' in the labour market in order to help get inflation back to its 1% to 3% range (annual inflation was 6.0% as of the June quarter), has forecast that there will be a sharp rise in unemployment in the second half of this year. Its most recent forecast (in May) was for unemployment to go up to 4.1% as of the September quarter (that we are now in) and to be 4.6% by the end of the year.
BNZ senior economist Doug Steel said looking across industries, the decline in job ads in July was more broad-based than it was in June.
He said job ads fell in most regions in July, albeit to varying degrees. The exception was a small gain in the West Coast.
"Auckland remains notable as the only region posting a level of job ads clearly below pre-covid levels (of 2019). Wellington job ads have slipped to be near that benchmark in July, while all other regions remain above 2019 levels."
Steel said SEEK’s candidate availability measure continues to trend strongly upwards, to "now quite elevated levels".
"It suggests the very tight labour market conditions of last year have gone.
"Such rapid change is not yet obvious in New Zealand’s unemployment rate, to date. However, the increase in applications-per-ad has certainly been reflected in business surveys suggesting labour is less difficult to find. A trend higher in applications-per-ad is evident across all regions and most industries. Two exceptions are CEO & General Management and Legal."
Job ads for the majority of industries fell in the month. For some, like Consulting & Strategy, a very large drop in July followed a sizeable increase in the previous month. But for others such as Manufacturing, Transport & Logistics and Call Centre & Customer Service, July’s drop added to those seen in June. There were some pockets of increase, with Sport & Recreation and Administration & Office Support each posting a 5% gain in July.
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I agree and truly hope that INZ shows no real rush in stamping out residency visas to non-critical temporary workers. The last thing we want is hundreds of thousands of recently migrated cooks and waiters becoming eligible for job seeker benefits right before the big job loss event begins.
Hence why there could be a massive surge in listings if these boomers all decide to offload their properties - but I don't have the data on what proportion of dwellings are owned by different generations.
Especially if they can see there are no capital gains (or risk of futher losses) and the ease of just dealing with a bank term deposit to get the same ROI, without having to deal with property managers/tenants etc.
If that were the case, suddenly the myth of a shortage of housing could be a myth as a flood of rentals come onto the market simultaneously.
We are approaching a point when boomers are also dying in significant numbers. Around 50% of them will be dead in the next 10-15 years - and there are a truck load of them as a proportion of our overall population.
Have a look in the local newspaper and see how many are dying on a daily basis in their 60's - 70's. (remember if the average life expectancy is 85 ish, it means on average 50% of them don't make it that far).
Again, not good as these are friends/family, but it is happening around us right now.
I reckon they will wait until after the election with the hope that interest in investment properties picks up after National reinstates interest deductibility. If Labour wins (very unlikely from here I reckon) it will be a blood bath as they all try to get out at once.
Lots - well, probably about a third - of the semi-retired boomers I know are looking for work to top up savings.
Some just 20-30 hours a week. And they joke they'd be happy with stacking shelves at the local supermarket for minimum wage. Others are looking for full time work. And some are focusing on contract work.
I'd not be as sure as you seem to be that boomers will all be siting back, out of the workforce, while warming their butts on big piles of cash. They may have big piles of cash but recent cost of living rises have made many fearful those piles of cash won't be big enough.
Good point/s - and don't disagree with you. How this plays out is uncertain. What I do know is that boomers are a very large proportion of our total population and in 10-15 years, around 50% of them are going to be dead. They may want to work from the grave, and if so, I take my hat off to them!
Yes it's my prediction which I made at the beginning of this year. In my opinion, something will "break" in the second half of 2023, it could come from the commercial property sector which could well start a domino effect of taking some banks down, it could come from China, which of course also has big property problems, or from elsewhere. The bottom line is quite simple, the mountains of debts cannot survive the huge increase in the cost of debt (interest rates). Yes I think the sharemarket will tank as well, I don't give financial advice but you can come to your own conclusions.
If the OCR falls it will be large numbers of people are losing jobs and defaulting on rents/mortgages.
Might be around the number of for each100bps drop in OCR = 1-2% of working age population unemployment/can't pay rent or mortgage (very significant issue).
This isn't good, its a bad thing.
Falling OCR = weak economy.
Weak economy in a normal/sane market means falling asset prices.
I look at the chart above and think that we may have only witnessed the end of the beginning for house price falls.
My experience during the GFC in the US was that house price falls accelerated as unemployment started rising, and as the Fed cut interest rates.
Banks stopped lending in this environment and people collectively believed that by waiting, they could buy the same house for cheaper in the future by buying off the person who loses their job (not a great thing, it was terrible).
Well we do tend to be a good 15-20 years behind the rest of the world... Seems crazy that government / RBNZ allowed it to happen after the GFC: "The US has collapsed, we need to resurrect our economy through really low interest rates, who cares if it creates the exact same problem here"
I have noticed a massive increase in salary of skilled people over the last 3 years as businesses actively tried to retain staff. I did a bit of research recently and the numbers that sales/bdm/reps are getting is out of the park. I'm picking I might be able to pick up a cheaper one and have a lot more choice in 12 months.
Isn't that the intention to break the wage-price spiral that the government has been hinting? In simple terms, it means flooding the job markets with cheap migrants and pitting them against local workers to instigate a race to the bottom on wages.
Low-value businesses and speculators win, while productive workers and enterprises lose out big. Meanwhile, the government will stick to its guns that it's kids in their early-20s leaving NZ for OE when most of us know that's not even half-true.
Unfortunately what "needs" to happen and what actually happens are two separate things and it's good to understand this. The reason for this, is that is that what needs to happen to improve the economy takes a long time but the people making the decisions have a very short term view because they know they will be gone if they inflict too much pain. That's why most solutions are short term, short-sighted band-aid remedies that don't address the actual problems.
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