Insights from ASB and Westpac
New Zealand’s employment sector has shown signs of resilience at the start of 2025, according to recent reports from ASB and Westpac.
Nick Tuffley (pictured above), ASB’s chief economist, noted a “strong start to the year for hiring for 2025, albeit from a low base,” with the services sector leading job gains, buoyed by the prospect of continued interest rate relief.
However, employment conditions in the goods sector remain concerning, and the overall employment scenario remains uneven across different sectors and age groups.
Services sector grows; goods and primary Sectors struggle
The services sector exhibited a 0.5% increase in jobs, particularly in healthcare and social assistance, which countered the broader decline in areas like administration and support services.
Conversely, the goods sector continues to face significant challenges, with employment down by 0.2% year-over-year, and the construction and manufacturing sectors experiencing notable job losses.
The primary sector also saw a slight decline in employment, reflecting ongoing economic pressures.
Youth employment under strain
Young workers, particularly those between the ages of 15 and 19, are experiencing the highest impact, with job losses significantly higher than other age groups.
This trend is consistent with data from the Household Labour Force Survey (HLFS), which indicated that younger workers are disproportionately affected by current labour market conditions.
Job losses greater in Auckland, Wellington; men harder hit
Job losses have been widespread across regions, with significant declines observed in Auckland and Wellington.
Moreover, the impact on employment has varied by gender, with men experiencing a sharper decline in jobs compared to women.
Cautious optimism amidst challenges
While the January increase in hiring offers a glimmer of hope, ASB anticipates that hiring will remain “patchy” in the first half of 2025, with expectations of gradual strengthening later in the year.
“We expect hiring to remain patchy over the first half of 2025 before concertedly strengthening thereafter,” Tuffley said.
This cautious optimism is tempered by the need for further cuts in the OCR to stimulate the labor market and prevent long-term damage.
Westpac's perspective: Employment stabilisation
Michael Gordon (pictured right), senior economist at Westpac NZ, echoed a similar sentiment regarding employment trends.
The Monthly Employment Indicator (MEI) showed a modest increase in filled jobs by 0.3% in January, suggesting stabilisation after a marked downturn through mid-2024.
Despite these positive signs, challenges remain, particularly in balancing gains in tourism-related sectors against losses in sectors like construction and professional services.
Unemployment predictions and economic adjustments
Both economists forecast a peak in unemployment rates in the mid-year, with potential improvements as the economy gradually adjusts to the evolving market conditions.
“The global environment remains uncertain and fickle,” Tuffley said, underscoring the complexity of predicting exact employment trends.
