Our take on the latest Labour market statistics (Wed 6 May 2020)
Employment grows 1.6%pa
Unemployment rate up to 4.2%
Labour costs rise 2.5%pa
The key numbers...
- Employment rose 1.6%pa and the employment rate rose to 67.5% in the March 2020 quarter driven by a 1.8%pa rise in full-time employment and a 0.9%pa rise in part-time employment. This is the first time since the September 2018 quarter that part-time employment has risen.
- The unemployment rate edged up from 4.0% to 4.2% (seasonally adjusted) in the March 2020 quarter.
- Participation in the labour market edged up from 70.1% in the December 2019 quarter to 70.4% (seasonally adjusted) in the March 2020 quarter.
- Labour cost growth eased slightly from 2.6%pa in the December 2019 quarter to 2.5%pa in the March 2020 quarter as tightness in the labour market persisted. Strong labour cost growth continues to be driven by the public sector, where labour costs grew 3.2%pa in the March 2020 quarter. Private sector labour costs rose 2.4%pa.
High employment and labour force participation
...and our reaction
- The labour market tightened further going into the first quarter of 2020, with increases in both full-time and part-time employment.
- Unemployment edged up, but this was the result of the strong labour market encouraging more people into the labour force to look for work.
- Tighter labour market conditions continued pressure on labour costs as businesses and the public sector pay more to retain and attract talent.
- The COVID-19 pandemic and government’s containment measures, such as closing New Zealand’s borders and implementing an economic lockdown, will cause a sharp shock to New Zealand’s short-term growth prospects. A steep decline in tourism activity and the coming recession will result in immediate job losses that we expect will begin to materialise in the June 2020 results. With the possible exceptions of health care and domestic education, every sector of the economy is expected to contract in the coming 12 months.
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