Job adverts at odds with labour market

Photo: Getty Images
Photo: Getty Images
The ANZ Job Ads survey fell 2.1% in April, suggesting a plateau had been reached in the unemployment rate, ANZ senior economist Liz Kendall said.

Annual growth in job advertisements slowed to 4.9% on a three-month moving average, suggesting weaker employment growth ahead.

New Zealand's unemployment rate fell to 4.4% in March from 4.5% in December, the lowest rate in nine years. Employment growth was 3.1% and the participation rate was 70.8%.

Ms Kendall said given the tight labour market, some employers might be giving up advertising.

However, with both surveyed business confidence and hiring intentions down, weaker labour demand was probably the main driver.

"We expect ongoing employment growth, consistent with our forecast of 2% to 3% year-on-year economic [GDP] growth. The data suggests it is not all smooth sailing."

The economy was grappling with capacity constraints and residual policy uncertainty in the labour relations area, she said.

The job advertisements data was consistent with a degree of employer wariness, as reflected in the ANZ business confidence survey.

Details in the Job Ads survey showed job advertisements in construction, utilities, manufacturing and transport had fallen 3% in the year to date after exceptional growth during the past three years, Ms Kendall said.

Falls were also prominent in agriculture, forestry, mining and fishing (down 7%), and finance, professional scientific, real estate and administration (down 2%).

The results were consistent with the ANZ Business Outlook in which agricultural and construction firms were "particularly downbeat".

"This negativity seems at odds with the elevated construction pipeline and favourable terms of trade so may prove temporary. But late-cycle headwinds are at play."

There was less scope for growth in activity, profits were being squeezed and credit constraints were being felt, all of which made hiring less attractive, she said.

Pockets of strength were evident for information technology (up 13% year-to-date), health and education (7%) and retail, tourism and recreation (3%).

Services firms were particularly positive. A net 14% of firms were planning increasing their workforce in the future.

Growth in job advertisements remained concentrated in the regions.

During the past year, advertisements had increased strongly on the West Coast (44%), Southland (23%), Northland 19%) and the Bay of Plenty (18%).

"The labour market is tight, which we expect to flow through into higher wage inflation in time."

Recent increases in the minimum wage would provide a boost and conditions were supportive of a broader increase in wage inflation, even if it was gradual, Ms Kendall said.

Any increase might prove temporary, particularly given the present subdued inflation environment.

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