Employment indicators
Further job gains in July, but Lockdown 2.0 setback expected
27 Aug 2021
Our take on the latest Employment indicators (Fri 27 Aug 2021)
Filled jobs rise 0.8% (seasonally adjusted) in July
Faster growth outside urban centres
Lockdown 2.0 hit expected - Jobseekers already up 2k
The key numbers...
- Employment continued to rise strongly in July, with seasonally adjusted filled jobs rising 0.8% from June.
- Jobs growth remains broad-based across the country, but urban areas are showing slightly slower growth. Canterbury, Auckland, and Wellington employment growth was in the bottom half of all regions in July, reinforcing our view that provincial economies, particularly in the North Island, are currently seeing the strongest levels of activity.
- Industry-level employment shows similar results, although job numbers in the primary sector are down a steep 2.9%pa due to the ongoing lack of workers. Professional and finance service employment has joined healthcare and construction with growth of more than 6%pa, and tourism-related sectors show sustained higher activity.
- Lockdown 2.0 is expected to provide a setback in hiring, and some weakness is already apparent, with weekly Jobseeker Support numbers jumping 1% (up by 2,022 recipients) last week (20 August) – equivalent to a four-week setback.
Still-strong job activity
Monthly filled jobs, seasonally adjusted, quarterly % change
...and our reaction
- July’s strong result for job numbers adds to the picture of a tight labour market. The continued rise in employment, coupled with a range of other labour market data, shows the New Zealand labour market has limited spare capacity.
- Regional and industrial analysis shows that there’s still higher levels of economic activity across the country, with more people needing to be employed to service this demand. Higher growth in the North Island, and outside urban centres, confirms other indicators showing higher cost pressures and strong economic activity in these areas too.
- Lockdown 2.0 looks set to make August and possibly September figures a bit weaker, limiting hiring and possibly resulting in some job losses. However, labour market tightness is expected to reappear in a month or so, given the level of spending that will come back at lower Alert Levels.
- The immediate and not insignificant rise in Jobseeker Support is something to watch. The rise is the first substantial increase since the usual summer jump, and it could indicate a larger-than-expected hit from the lockdown to job numbers, or a knee-jerk reaction again by some firms.
- Official wage subsidy data to last Friday (20 August) shows 135,570 workers were covered on the first day of the scheme being open, with around 404,000 workers covered by Tuesday this week. Uptake for the subsidy is tracking lower than expected, with larger firms not immediately accessing the scheme.
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