Unemployment levels are at record lows, but a sharp rise in
the jobless level is coming, with 6% unemployment possible by
the end of next year as businesses defer hiring staff or
replacing those leaving, ASB economist Jane Turner predicts.
Statistics New Zealand's quarterly household labour force
survey results due out tomorrow will reflect rising
unemployment and declining employment, with the ASB slightly
more pessimistic than other analysts of the effects of the
recession and credit crunch.
Unemployment hit a record low of 3.4% in December last year.
A poll of a dozen analysts expects employment to fall 0.6%
compared with the ASB's 1% for the third quarter.
It predicts unemployment will rise from 3.9% to 4.4%,
compared with analysts' expectations of 4.3%.
Ms Turner said with the economy having been in recession
since the beginning of the year, a deterioration in the
labour market would follow.
"Business confidence surveys point to falling employment
intentions as profits have been hit by falling demand," she
said yesterday.
The household survey, an estimate of the usually resident,
non-institutionalised, civilian population of New Zealand
aged over 15 years old, is considered a key indicator for
trends.
ANZ chief economist Cameron Bagrie said the construction,
retail (and distribution) and business services (including
finance) sectors had provided two-thirds of the job growth
during the past five years and were expected to be hit first.
While employment figures had been volatile during the past
two years, the unemployment figure was a more consistent
measure.
However, he highlighted there was a "wild card" in the data,
in that businesses could shed staff quicker sand "more
aggressively" than expected because of the turnaround during
the past three to six months from reporting a "skills
shortage" to "ample supply" of staff.
"Until now, businesses have been hoarding labour. But with
sales down and costs up, they will be looking for increased
productivity and gaining efficiencies,' Mr Bagrie said.
Ms Turner said the credit crunch had exacerbated the
situation, having triggered more uncertainty.
Initially, the housing-related sector, retail and
construction would experience a rise in unemployment, which
was likely to be followed by cuts to jobs in the finance and
insurance sectors, Ms Turner said.
She predicted a more broad-based fall in employment later
next year "as companies cut back, firms are likely to be more
circumspect on hiring decisions and replacement of departing
staff".
