Navigating New Zealand's uneven labour market recovery
As New Zealand attempts to emerge from its recent economic recession, the labour market presents a mixed picture of stability and sectoral challenges, according to the latest reports from Westpac NZ and ASB.
Stagnant employment despite economic upticks
Michael Gordon (pictured left) of Westpac NZ noted that the Monthly Employment Indicator (MEI) was unchanged in February, aligning with expectations but suggesting a labour market that struggles to grow.
“The number of jobs has been broadly steady in recent months, following a substantial fall through the middle of last year,” Gordon said.
This stagnation occurs despite GDP figures showing slight improvements, signaling a slow economic recovery that is not yet robust enough to boost employment significantly. This is further emphasized by a drop in the Westpac-McDermott Miller Employment Confidence Index, which fell 3.3 points to 88.3 in the March quarter, reflecting ongoing concerns in the labour market.
The MEI’s sectoral analysis revealed a divide, with tourism-linked sectors like transport and hospitality leading the rebound, whereas construction and manufacturing continue to shed jobs.
“There continues to be substantial job losses in the highly cyclical construction and manufacturing sectors,” Gordon said.
Subdued hiring and future outlook
Echoing Gordon’s cautious optimism, Nick Tuffley (pictured right) from ASB pointed out that overall hiring remains virtually unchanged and warned against expecting a quick labour market recovery.
“The labour market tends to lag the cycle, hence flattish employment is to be expected in the early stages of economic recovery,” Tuffley said.
He also identified a concerning trend of ongoing job losses, particularly among younger workers and in the goods sector.
Regional and demographic disparities
Both analysts pointed to significant regional and demographic disparities in job losses.
Auckland and Wellington have experienced the most substantial declines, while sectors that typically employ younger individuals continued to face high rates of unemployment.
