Infometrics: Economic lull drives employment decline
New Zealand’s economic slowdown has significantly impacted employment across several industries, with businesses adjusting their workforce levels in response to reduced activity and falling demand.
Brad Olsen (pictured above), chief executive and principal economist at Infometrics, highlighted how businesses are responding to these challenges.
“Employment has fallen over the last year, as businesses across New Zealand have seen lower sales and falling business activity,” Olsen said.
Infometrics’ analysis showed a loss of approximately 20,800 jobs between September 2023 and September 2024 – a 0.9% decline. The economic slowdown is a key driver behind these workforce reductions.
Construction employment and support services hit hardest
The economic slowdown has hit the construction industry hardest, with job losses of around 10,300 over the past year. Concrete production and building activity have slowed significantly as higher interest rates reduce demand, exacerbating the challenges faced by the sector.
Administrative and support services, another casualty of the economic slowdown, saw the second-largest decline, shedding 7,100 jobs. According to Infometrics, this includes roles in recruitment and temporary staffing, which have seen reduced demand as businesses scale back hiring plans.
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Healthcare employment grows despite slowdown
Despite the economic slowdown, some industries have experienced growth. Healthcare employment rose by nearly 10,600 roles, driven by New Zealand’s growing and aging population.
“Demographic pressures are increasing demands on the health system, requiring more workers,” Olsen said.
Infometrics highlights that education followed with a 3,200-job increase, reflecting population growth and a rise in reskilling efforts as the economic slowdown drives more individuals to seek further training.
Infometrics compares employment trends during slowdowns
The current economic slowdown shares similarities with job trends during the COVID-19 pandemic.
Infometrics pointed out that sectors like retail, food services, and support services experienced job declines in both periods, albeit for different reasons.
During the pandemic, losses were tied to border closures and reduced international tourism, whereas today’s declines are driven by high inflation and interest rates restricting household spending.
In contrast, construction employment surged during the pandemic due to low interest rates fueling a building boom. Now, the economic slowdown and higher interest rates have reversed that trend, causing significant job losses.
Employment recovery hinges on economic stability
While many job reductions linked to the economic slowdown are expected to recover as interest rates ease and spending picks up, some losses may be permanent.
For example, manufacturing roles impacted by mill closures are unlikely to return, and the media industry continues to face challenges from shifts toward digital advertising.
Infometrics emphasised that understanding these employment shifts is essential for guiding policy and workforce planning in the years ahead.
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