Tourism leads recovery
In December, the New Zealand labour market experienced a marginal recovery, with the Monthly Employment Indicator (MEI) recording a 0.1% increase in filled jobs.
This growth follows a 0.2% increase in November, adjusted down from an initial 0.3%. These consecutive months of slight improvements mark a recovery trend after significant declines earlier in the year.
According to Westpac NZ’s senior economist, Michael Gordon, (pictured above), the monthly change of +0.1% (prev month: +0.2%) and annual change of -1.1% (prev: -1.3%) reflects a gradual stabilisation in the job market.
Sectorial recovery led by tourism
Employment gains have been particularly notable in sectors connected to international tourism, such as transport, hospitality, and recreational services.
According to Westpac NZ, this resurgence aligns with the increased number of overseas visitors toward the year’s end, following a period where visitor numbers were only about 80% of pre-COVID levels.
However, domestically focused sectors like construction and professional services continue to face reductions in workforce numbers, underscoring ongoing sector-specific challenges.
Analysing the data source
The MEI, sourced from income tax data, provides a comprehensive overview of the employment landscape, capturing actual employment figures across the country.
Although it differs from the quarterly household labor force survey (HLFS) in methodology, the MEI reliably predicts HLFS trends.
“The MEI was down by 0.2% on average over the December quarter, which would be consistent with a modest further rise in the unemployment rate from 4.8% currently,” Gordon said.
Looking ahead: Labour market forecasts
The forthcoming release of the December quarter labour market surveys is highly anticipated. These surveys are expected to offer more detailed insights into employment trends, potentially confirming the subtle recovery indicated by the MEI.
The Westpac NZ report provides a cautious yet optimistic outlook on New Zealand’s labour market, suggesting that while the path to recovery is apparent, it remains gradual with varied sectoral impacts.
