Westpac McDermott Miller Employment Confidence Survey shows lowest level of confidence since we were emerging from the lockdown in 2020

Interest rates may now be going down, but that's not yet translating into renewed optimism about the jobs market.

The quarterly Westpac-McDermott Miller Employment Confidence Index fell by 2.2 points from 91.4 to 89.2 in the September quarter. And this was the lowest reading since the country was emerging from the first Covid-19 lockdown in 2020.

A reading below 100 indicates that more New Zealanders are pessimistic about the state of the labour market than are optimistic.

"The biggest driver of the weakness in confidence has been the perception that jobs are becoming much harder to find," Westpac senior economist Michael Gordon said.

"Job vacancies have been shrinking for some time, and in the last few months we’ve seen a turn to outright job losses."

The most recent unemployment figures, for the June quarter, showed that unemployment had risen during the quarter to 4.6% from 4.4% - well up on the low point of the cycle at 3.2% in 2022. 

Gordon said results from the latest survey showed that the unemployment rate has continued to rise at a faster pace over the last year. "...We expect it to reach 5% for the September quarter."

Households also remained downbeat on the outlook for job opportunities a year from now, although that measure did tick slightly higher in the September survey, Gordon said.

"That outlook is probably a fair reflection of how the labour market tends to lag the broader cycle. We’re now two years into an economic slowdown, and while job vacancies have been falling for some time, it’s only in the last few months that we’ve seen outright job losses.

"Similarly, it’s likely that it will take some time for lower interest rates to work their way through the economy, and for businesses to find themselves back in the position of needing to find more workers."

Gordon said confidence fell in seven regions and rose in four.

"Notably, the biggest fall was seen in Auckland, and while Wellington remains the most downbeat region, Auckland is now not far behind. This is a useful reminder that although the public sector cutbacks have been widely reported, their experience has not been unique. It’s sectors such as construction, manufacturing and retail that have seen the most significant job losses to date."

The survey was conducted over September 1-11, 2024, with a sample size of 1,555. The margin of error of the survey is 2.5%.