Kiwis' confidence in being able to get another job has plummeted in the past three months and is now approaching levels seen at the height of the pandemic.
According to the survey for the June quarter employment confidence fell by 13 points to 91.4 in the June quarter, reaching its lowest level since 2020.
(Westpac notes that In the September 2019 quarter the survey was shifted from phone to online interviewing, which improved the quality of the survey, but does mean there is "a structural break" in the survey, specifically in the first two questions on job availability.)
The sharp decline in confidence levels in this survey appears consistent with other indicators coming out in the past month. Confidence among the public generally seems to have taken a real dip - evidence that the Reserve Bank's efforts to rein in inflation by use of high interest rates are really beginning to bite hard.
Electronic card transaction data for May showed the fourth consecutive monthly drop in retail sales - and this was the biggest drop of the four.
According to the latest BNZ-SEEK job ads report job ads fell 4.8% in May. This follows a similar sized drop in April, taking job ads’ annual decline to 30.5%. Aside from Covid lockdown periods, job ads are at their lowest level since February 2016.
The BNZ – BusinessNZ Performance of Services Index (PSI), which has been going since 2007, recorded the lowest level of activity for a non-COVID lockdown month since the survey began.
GDP figures for the March quarter released last week showed the economy eeked out a 0.2% expansion in the quarter, following four falls in the previous five quarters. However on a per capita basis GDP has now shrunk 4.3% since late 2022, which is a bigger per capita fall than the 4.2% seen after the GFC.
According to Statistics NZ the rate of unemployment increased to 4.3% in the March quarter from 4.0% in December. The increase was actually a little bit more than the Reserve Bank (RBNZ) had forecast. It saw unemployment rising to 4.2% in the March quarter.
The RBNZ is expecting to see unemployment continuing to rise - from what had previously been very low levels - to 5% by the end of this year.
Westpac senior economist Michael Gordon said New Zealand households "have taken a much dimmer view of the jobs market over the last three months".
"The Westpac-McDermott Miller Employment Confidence Index fell by 13 points to 91.4 in the June quarter survey, bringing it down to its lowest level since 2020 when the country was in the midst of the Covid pandemic. A reading below 100 indicates that more New Zealanders are pessimistic about the state of the labour market than are optimistic."
Gordon said the biggest decline in the survey was seen in people’s perceptions of current job opportunities, which fell by almost 24 points to a net -36%.
He said this was of particular interest as this particular indicator has had "a close correspondence" with the unemployment rate over time.
"The latest result suggests that the rise in unemployment, which began gradually in 2022 and 2023, is now gaining some momentum."
A lift in the unemployment rate had been long anticipated, as part of the Reserve Bank’s efforts to tame inflation pressures, Gordon said.
"If anything, it’s taken longer than expected to arise – perhaps due to employers looking to hold on to workers during the economy’s slowdown, having been burned by the difficulties of finding workers a couple of years back.
"We haven’t seen evidence of a significant rise in layoffs to date, but that may change as the slowdown progresses."
McDermott Miller market research director Imogen Rendall said confidence among employees in both the public and private sectors "has taken a real knock this quarter".
'For employees in the private sector, confidence has dropped 19.1 points down to 89.5, and for those working in the public sector, confidence has dropped 11.1 points down to 94.6.
"Both private and public sector employees have taken a particularly pessimistic view on the current availability of jobs, together with future job opportunities in a year’s time.
"Private sector employees are also indicating a real concern regarding their future job security. It will be interesting to see how this plays out over the months to come," Rendall said.
The survey was conducted from June 1 to June 12, 2024, with a sample size of 1,553. The margin of error of the survey is 2.5%.
31 Comments
This assumes their aim is some sort of easy flow with minimal damage, rather than semi-managed periodic destruction.
It's not like they've ever said something like "some of you are going to lose your jobs or your shirts due to our actions, but it's for the good of all of us".
Financial reinvention is a primary growth machine these days.
Yes, qualified buyers retreating, more debt ridden bag holders bailing. Possibly even more so post 01-July. With unemployment steadily rising, unlike Realty Land, there's no price flatlining, pancake, stable, floor or "flat as a ruler" talk in the land of reality.
I've always said even if the RBNZ starts cutting November, this will take at least 12-18 months to start taking effect in the economy. If we're rapidly declining like this past GFC lows already imagine another 3-4 months from now. Councils and Insurances are screwing us along with politicians and councils kicking the infrastructure can down the road over many decades. However, its time for Orr to look through insurances and rate rises and accept core inflation is going to be permanently sticky for many years and destroying all parts of the economy to bring down core to within the target band is mad.
Agreed, reading the RBNZ remit it says inflation within 1-3% with a focus on the 2% midpoint…I know core has a higher risk of reigniting so there is a need to be cautious but if the headline number stacks up then isn’t that goal achieved?
What do they do if everything stays this 💩 considering the lag to kickstart anything and we undershoot the 2% midpoint?
One big reason core inflation is sticky is because we can no longer grow fast enough to pay back our own debt. Lowering rates will alleviate the short term struggle but will just encourage even more debt to be added now which makes the long term problem even worse when we inevitably run out of rope. Better to fix the problem via some self-inflicted hard yards now rather than kick the can until we arrive at an uncontrolled correction via rating downgrade / currency collapse / seizure of assets by overseas creditors.
Debt-milking rentiers are 90% of the way to killing Western economies, and eagerly agitating for a shot at finishing the job...
This government's cabinet is almost entirely comprised of rentiers and is already taking their shot. At $2.9B the tax break they gave themselves amounts to the same spend as the nation's water infrastructure spend over the same period.
There are no jobs to be had in rent-seeking, or maintaining high house prices that just send the borrowing interest offshore, all at the cost of actual economic activity, yet here we are.
My mate works at one of the biggest construction/engineering firms in NZ (not FBU) but can't say it. He says they're making engineers redundant left right and centre as there is legit 0 work coming through and this kicked in from mid-April.
Hopefully a lot of the jobs made redundant can easily switch over to the government Infrastructure led projects.
It won't, the largest supply company will just keep increasing prices to maintain margin until they can't anymore and just shut up shop.
Decreases in charge out rates will just result in more companies going under and more tradies leaving the country (again).
Basically we are going to end up in the same situation as the start of the last boom, except we have many more homeless and in emergency housing. Meanwhile social housing will be decreasing again.
In my career I've seen this happen at least 4 times and we don't seem to learn and keep saying it's different this time. 70% chance we will see an increase to house prices that it dwarfs the last increase.
Go on tell me that it can't because it's not sustainable, I'll tell you that I've heard that at least 4 times before.
Different sectors different results, the company I work at mainly deals in coolstores, light industrial and commercial warehouses, along with some multiunit residential stuff and we are fully booked till the end of 2025 and looking to turnover $100M this year, up from $40M 2023, which was down from $110M in 2022. We are hiring.
A lot of projects delayed in council coming online finally and clients pushing go on projects due to interest rates levelling off.
But yes the phone is ringing hot with people looking for work.
I haven't seen any sign of that happening yet. I've completely lost my ability to work in the office. A lot of companies went down the agile workspace route and this has likely contributed to people not wanting to return. At work I have a selection of sterile white desks with two wonky monitors while at home I have an office like the bridge on the Starship Enterprise. It was nicer in the old days when you had a personalized workspace.
Might be partly due to the sense of entitlement displayed by candidates. Every interview conversation I've had in the last few years immediately led to candidates expecting me to sell us to them. No-one felt the need to sell themselves whilst money was free. It takes hard times to make good people.
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