Jobs pessimism rises in South

John Christie.
John Christie.
Otago and Southland have become more pessimistic about employment, both provinces now having more pessimists than optimists when it comes to job prospects.

The Westpac McDermott Miller Employment Confidence index, released yesterday, shows Otago losing 2.8 points in December to 96.2 points. Southland lost 9.6 points to be at 96.1, down from an optimistic 105.6 points in September.

Rural New Zealand felt the brunt of falling confidence in December, with Northland down 5.2 to 99, Waikato down 11.1 to 96.3, Gisborne-Hawkes Bay down 4.6 to 94.5 and Nelson-Marlborough-West Coast down 3.7 to 103.3.

A reading above 100 represents more optimists than pessimists while a reading below 100 indicates more pessimists.

In the past two years, Otago has been hit by job losses which have included those from the Dunedin City Council-owned Delta, the Milburn wood processing factory, the Department of Conservation and KiwiRail.

More than 100 highly skilled jobs at Invermay remain under a cloud as AgResearch considers sending them to either Lincoln or Palmerston North.

Public opposition in both Otago and Southland has been strong about reducing the presence of Invermay in the South.

Recently, Oceana Gold announced more than 100 jobs would go from its East Otago Macraes gold-mining operation, prompting a contractor to announce more than 40 staff would need to be relocated to other New Zealand operations.

There remains uncertainty about jobs at the Aoraki Polytechnic.

There were some increases, with Auckland up 1.6, Bay of Plenty up 10.5, Taranaki-Manawatu up 2.7, Wellington up 7.7 and Canterbury up 1.9.

Unsurprisingly, Canterbury is the most optimistic about employment with 115 points, as the earthquake rebuild gathers momentum.

Otago Chamber of Commerce chief executive John Christie said the latest data showed clearly the different economies running in New Zealand.

The growth in Auckland and Christchurch had not moved into provincial New Zealand.

There were many indicators pointing to a resurgent national economy but that was not widely felt in Otago, particularly Dunedin.

Chamber members were still feeling a squeeze on their profits and were reluctant to take on more staff until forward orders and increasing sales were realised, he said.

However, there were some areas in Dunedin which were starting to hire more staff.

They included trades firms taking on extra workers, some technology companies expanding and Fisher and Paykel Appliances taking on a ''substantial number'' of new staff.

''But we are not seeing it across all sectors. It will come, but it will take some time,'' Mr Christie said.

Westpac senior economist Michael Gordon said the overall confidence index rose slightly in the December quarter to a ''mildly optimistic'' 103.4.

It was the second-highest reading of the last two years, although it remained at very subdued levels compared with the pre-recession trend.

''The relatively low level of the index fits with the observation that while the New Zealand economy is gathering a substantial head of steam over 2013, it had yet to reach its full capacity.''

Some of the ongoing caution around labour market conditions could be traced to those already in work, he said.

Recent earnings growth had been subdued and expectations for future earnings growth had been trending lower in recent years.

Low inflation tended to be followed by low wage growth.

While inflation was now starting to track higher, the fact it fell to a 14-year low during 2013 was likely to have been reflected in recent pay negotiations, and could continue to do so into the near future, Mr Gordon said.

''Fortunately, there are signs conditions are gradually improving for job seekers. The rise in perceived job opportunities in the latest confidence index is consistent with a swathe of other indicators.''

Business surveys showed firms' employment intentions were at their highest in years, online job advertisements were up 15% on a year earlier and the number of people receiving the job seeker support benefit had fallen 5% in the last year.

Together, those indicators provided more confidence the unemployment rate would finally break below its post-recession range of 6% to 7%, Mr Gordon said.

Within the index's five component series, households' perceptions of current job opportunities saw the biggest improvement, rising from a net -51.9% to -49.5%.

That was the least negative reading since December 2008.

Expectations for job opportunities a year from now rose from -5.8% to -3.4%.

The net percentage reporting rising earnings rose for the sixth quarter in a row to 28%.

The net percentage expecting earnings to rise in the coming year fell from 32.6% to 29.3%, the lowest since June 2012.

Respondents' expectations for their own job security fell for a second quarter to a net 10% optimistic.

The survey was conducted between December 1-10 with a sample size of 1569.

dene.mackenzie@odt.co.nz

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