quarterly labour market report may 2016 · 2016. 11. 4. · ministry of business, innovation &...

MB13090_1228 May 2016

May 2016

ISSN 2253-5721

May 2016

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MINISTRY OF BUSINESS, INNOVATION & EMPLOYMENT i

QUARTERLY LABOUR MARKET REPORT MAY 2016

Contents

Executive Summary ....................................................................................................................... ii

Economic conditions ..................................................................................................................... 1

Economic outlook ...................................................................................................................... 1

Labour demand ............................................................................................................................. 3

Employment trends by full-time/part-time status and sex ...................................................... 3

Labour demand by industry and region .................................................................................... 5

Labour supply ................................................................................................................................ 7

Migration ................................................................................................................................... 7

Labour force .............................................................................................................................. 8

Labour market matching ............................................................................................................. 10

Youth labour markets .............................................................................................................. 10

Jobseeker support ................................................................................................................... 11

Job vacancies ........................................................................................................................... 12

Wages ...................................................................................................................................... 14

MINISTRY OF BUSINESS, INNOVATION & EMPLOYMENT

ii QUARTERLY LABOUR MARKET REPORT MAY 2016

Executive Summary

The labour market has remained strong in the March quarter, following a solid result in

December. This reflects generally improving economic conditions in the latter half of 2015,

after a sluggish start to the year.

The working-age population had its largest quarterly rise since the series began in 1986, as net

migration continues to be very strong. Growth in the labour force was larger, however, and the

labour force participation rate rose for the first time in over a year.

Wage pressures remain subdued, although this comes against a backdrop of historically low

inflation. Wage growth (as measured by the Labour Cost Index) has outpaced growth in the

Consumer Price Index for more than four years.

Table 1: Key labour market indicators (seasonally adjusted) SOURCE: Statistics New Zealand Household Labour Force Survey

Indicator March 2016 Quarterly change Annual change

Employed 2,399,000 +28,000 (1.2%) +47,000 (2.0%)

Unemployed 144,000 +10,000 (7.4%) -1,000 (-0.3%)

Participation rate (%) 69.0 +0.5 pp. -0.4 pp.

Employment rate (%) 65.1 +0.2 pp. -0.3 pp.

Unemployment rate (%) 5.7 +0.3 pp. -0.1 pp.

MBIE forecasts employment growth to remain strong, but for growth rates to decline over the

next three years.

Table 2: Short-term labour market forecasts (year ending March, or March quarter) SOURCE: Ministry of Business, Innovation and Employment

Indicator Actual Forecast

2016 2017 2018 2019

Employment growth

(AAPC)

2.1 2.3 2.1 1.9

Participation rate (%) 69.0 68.9 69.2 69.2

Employment rate (%) 65.1 64.8 65.3 65.7

Unemployment rate (%) 5.7 6.0 5.5 5.0


1 QUARTERLY LABOUR MARKET REPORT MAY 2016

Economic conditions

New Zealand’s economy has rebounded in the latter half of 2015, following a sluggish start to

the year. Real production GDP rose by 0.9 per cent in both the September and December

quarters, beating market expectations both times. This follows growth of 0.3 per cent in both

the March and June quarters.

The services sector drove growth over the most recent two quarters, expanding by 0.8 per

cent each time. Business services- specifically advertising, market research, management

services, scientific, and architectural and engineering services- lie behind this growth. Retail

trade and accommodation was also up strongly on the back of record levels of tourist spend.

Economic outlook

A rebound in the economy was also suggested through leading indicators of economic growth.

The Quarterly Survey of Business Opinion measure of business confidence hit a four-year low

in September, before rebounding in December. Likewise the ANZ Business Outlook hit a six-

year low in August, but picked up in the months that followed. At the start of 2016, these

measures are more subdued, although not as low as they were during the first half of 2015.

This points to the potential for softer growth through 2016. Treasury expects quarterly GDP

growth to ease back to around 0.6 per cent a quarter, as the effects of lower dairy prices on

exports and farm incomes move through the economy.



Figure 1: Production GDP growth SOURCE: Statistics New Zealand National Accounts

Figure 2: Business confidence SOURCES: ANZ Business Outlook, NZIER Quarterly Survey of Business Opinion



Labour demand

Reflecting the improving economy, labour demand strengthened at the end of 2015.

Employment increased by 51,000 (2.2 per cent) in the six months to March 2016, following a

4,000 (0.2 per cent) drop in the six months to September 2015.

Other indicators also signalled strengthening labour demand. The Quarterly Employment

Survey measure of filled jobs rose 1.1 per cent in December and 1.2 per cent in March, the

strongest six-months of growth since 2004. Actual hours worked (as measured by the

Household Labour Force Survey) rose 2.1 per cent in the six months to March, compared to 0.4

per cent in the prior six months.

Figure 3: Main indicators of labour demand SOURCES: Statistics New Zealand Household Labour Force Survey, Statistics New Zealand Quarterly Employment Survey

Employment trends by full-time/part-time status and sex

The quarterly rise in employment was driven by increase in both part-time and full-time

employment. Full-time employment rose by 18,000 (1.0 per cent), the 14th

straight quarter of

growth, up from a 12,000 (0.6 per cent) rise in December. Part-time employment rose by 6,000

(1.2 per cent) down from the 15,000 (3.1 per cent) growth recorded in December.

Growth in part-time employment was stronger than full-time employment at the end of the

last business cycle (around 2007), but growth for both types of employment stalled during the

recession. Since 2012, full-time employment growth has been strong, while part-time

employment growth has been more volatile.

The quarterly increase in employment was driven by more full-time employment of women,

which rose by 10,600 (1.4 per cent) over the quarter. Female part-time employment rose by a

more modest 2,500, or 0.7 per cent. Men also saw increased full-time employment (up 7,700

or 0.7 per cent), but accounted for the most of the growth in part-time employment (up 4,000,

or 2.7 per cent).

Male employment fell relative to female employment during the recession, although the

growth gap has narrowed since 2013.



Figure 4: Full-time/part-time employment index SOURCE: Statistics New Zealand Household Labour Force Survey

Figure 5: Female/male employment index SOURCE: Statistics New Zealand Household Labour Force Survey



Labour demand by industry and region

Construction was one of the two main industries driving employment over the year, with a

statistically significant increase of 17,500 people employed, concentrated in Auckland.

Canterbury’s construction employment has remained effectively static over the year.

The professional, scientific, technical, administrative and support services industry (a broad

sector that includes computer systems design, law, accountancy, research and consultancy)

was the other driver of employment growth. Employment in this industry also increased by

17,500 over the year, with that increase being centred in Auckland and Wellington.

At a regional level, half of New Zealand’s employment growth over the year to March was in

Auckland (23,400, or 2.9 per cent). Growth in employment for Auckland women (4.1 per cent)

was twice as strong as employment growth for Auckland men (2.0 per cent). Bay of Plenty also

had a significant employment increase over the year (up 7,900, or 5.7 per cent).

Figure 7 compares employment growth with population growth over the longer term. Some

regions (such as Auckland, Waikato, and Tasman/Nelson/Marlborough/West Coast) have seen

employment and population grow at roughly the same rate. On the other hand, Canterbury

and Bay of Plenty all showed sharper increases in their employment growth than population

growth in recent years.

Figure 6: Cumulative employment growth since March 2006 by industry SOURCE: Statistics New Zealand Household Labour Force Survey



Figure 7: Cumulative employment and population growth since March 2000 by region SOURCE: Statistics New Zealand Household Labour Force Survey



Labour supply

While labour demand has been increasing, this is being matched by strong growth in New

Zealand’s labour supply. In March 2016, the working-age population grew by a seasonally-

adjusted 29,000 people (0.8 per cent), the largest quarterly increase since the series began in

1986. Over the year, population grew by 90,000 (2.5 per cent), the strongest annual increase

on record.

Population growth is concentrated in younger age-groups, particularly 20-34 year olds, and is

largely a migration effect. Fewer New Zealanders in this age group are migrating to Australia or

other countries.

Migration

New Zealand had a net migration gain of 67,600 in the year ending March 2016, the highest

net migration on record. The annual net gain in migrants has been setting new records for 20

straight months.

Net migration was driven by increasing arrivals and decreasing departures. Migrant arrivals

totalled 124,100 in the year ending March, up 9 per cent from the previous March year, while

migrant departures totalled 56,500, down 2 per cent.

Three trends are underpinning this growth. Firstly, since 2011, work visas have picked up

sharply, a trend supported by increasing numbers of working-holiday makers. Secondly, from

2012 onwards, the annual number of New Zealand citizens returning from abroad has been

increasing. Finally, there has been a sharp uptick in the number of student visas, primarily for

Indian students. This has begun to level out in recent months.

The record net loss of people to Australia of 40,000 in the August 2012 year has changed to a

net gain of 1,900 people in the year to March 2016. Fewer New Zealanders are leaving for

Australia, with departures of New Zealand citizens to Australia falling 9 per cent (to 20,500)

over the year to March 2016.

Figure 8: Annual net migration SOURCE: Statistics New Zealand Permanent and Long-term Migration Series



Figure 9: Annual arrivals by visa type SOURCE: Statistics New Zealand Permanent and Long-term Migration Series

Labour force

Quarterly growth in the labour force outpaced even the strong population growth, causing the

labour force participation rate to rise by 0.5 percentage points to 69.0 per cent. This is the first

increase in the participation rate since it hit an all-time high of 69.5 per cent in December

2014.

The labour force grew by 38,000 (1.5 per cent) in the March quarter, the largest quarterly

increase since December 2004. This growth consisted of a 28,000 increase in employment, and

a 10,000 increase in unemployment.

Figure 10 shows changes in labour force and population by age group. The 15-24 year age

group is highly seasonal, and includes many students whose opportunities for part-time work

fell during the recession. Among older workers, the labour force grows much more slowly than

population, because labour force participation rates (while generally rising) are much lower for

older workers than those aged 25-64.

New Zealand’s labour force participation rate is higher than comparable countries. An ageing

population is expected to put downward pressure on the participation rate over the longer-

term. In recent years, stronger-than-forecast participation rate increases within older age

groups have kept participation rates buoyant.



Figure 10: Cumulative growth in labour force and population by age group SOURCE: Statistics New Zealand Household Labour Force Survey



Labour market matching

Unemployment rose by 10,000 (7.4 per cent) over the March quarter. This consisted of a 7,000

increase in female unemployed, and a 3,000 increase in male unemployed. This caused the

unemployment rate to rise from 5.4 per cent to 5.7 per cent. Over the year, the

unemployment rate has fallen by 0.1 percentage points.

Unemployment rates increased in 7 of the 12 regions over the year, although none of these

increases were statistically significant. Bay of Plenty did record a statistically significant fall in

its unemployment rate (down 2.7 percentage points to 5.1 per cent), and now has the North

Island’s lowest unemployment rate.

Youth labour markets

The proportion of youth (aged 15-24 years) not in employment, education or training (NEET)

rose 1.4 percentage points over the quarter to 12.4 per cent, the highest rate since March

2013. This increase was due to the total number of NEET increasing by 10,000 (13.9 per cent)

over the quarter, while the youth population grew by 4,000 (0.6 per cent).

The increase in overall NEET rates was driven by males aged 15-19. Over both the year and

quarter, this was the only group that showed a statistically significant increase in NEET rates

and NEET numbers.

NEET among 20-24 year olds males rose over the quarter and the year, but this was not

statistically significant. Changes in NEET rates and NEET numbers for females were not

significant over either the year or the quarter.

Looking just at males aged 15-19, there appears to be a general downward trend in those who

are in education and outside the labour force. This started at the end of 2013 (see Figure 11).

Young males who were employed and in education rose during the same period, but this trend

has flattened out in recent quarters.

NEET numbers tend to be volatile, and an additional quarter’s data would be required to

determine if the quarterly rise in NEET is indicating a trend, or is just an anomaly.

Figure 11: Labour force outcomes for males aged 15-19 SOURCE: Statistics New Zealand Household Labour Force Survey



Jobseeker support

The number of people on Jobseeker Support benefits has remained flat over the past year,

although the general trend over the past five years shows declining numbers of recipients.

As of March 2016, 117,134 working-age people were receiving Jobseeker Support,

representing 4.2 per cent of New Zealand’s working-age population. This is a small increase

(241, or 0.2 per cent) compared with March 2015. The number of people on Jobseeker Support

fell among the 40-64 year age group, but rose for 18-39 year olds.

Jobseeker Support was introduced in July 2013 for people who are preparing for, and looking

for, full-time work. It incorporates the unemployment benefit, sickness benefit, domestic

purposes benefit with children 14 and older, and domestic purposes women alone benefit.

Since 2011, there was a divergence between the official number of people unemployed (the

Household Labour Force Survey measure) and the number of Jobseeker Support beneficiaries.

Persons ineligible for Jobseeker Support (but classified as unemployed) include:

- Unemployed 15-17 year olds

- Unemployed people 65 or older

- Unemployed people looking for part-time work (such as students)

- Unemployed people with sufficient family or personal income to support them while

looking for work

- Unemployed people already on another benefit

Figure 12: Unemployed and Jobseeker Support SOURCE: Statistics New Zealand Household Labour Force Survey; Ministry of Social Development National Benefit Factsheets



Job vacancies

The overall trend for vacancies has been rising in late 2015 and early 2016. The All Vacancies

Index rose 0.7 per cent in March, with growth being led by education and training (1.8 per

cent) and construction and engineering (1.6 per cent). Over the year to March 2016, the

strongest growth in vacancies was for construction and engineering (up 12.4 per cent),

accounting, HR, legal and administration (up 9.9 per cent), and education and training (7.5 per

cent).

At a regional level, the strongest annual increase in vacancies were in Bay of Plenty (up 15.2

per cent), Gisborne/Hawke’s Bay (up 10.4 per cent), and Auckland (up 9.2 per cent). The

biggest fall was in Canterbury (down 8.8 per cent).

Figure 13: Annual change in all vacancies index SOURCE: Ministry of Business, Innovation and Employment Jobs Online



Figure 14: Jobs Online Vacancies by Industry (Indexed to May 2007) SOURCE: Ministry of Business, Innovation and Employment Jobs Online

Figure 15: Jobs Online Vacancies by Region (Indexed to August 2010) SOURCE: Ministry of Business, Innovation and Employment Jobs Online



Wages

The Labour Cost Index (LCI) and Quarterly Employment Survey (QES) provide complementary

measures of wage growth. The LCI measures wage inflation and reflects changes in the rates

paid by employers to have the same job done to the same standard.

The QES measures the average gross earnings paid to employees in economically significant

businesses. Changes in the QES may result from changes to New Zealand’s industrial

composition (e.g. if a lower-paying industry increased its total paid hours relative to other

industries, it would lower the QES earning measure). Shifts in the QES may also reflect changes

within industries, such as the skill levels or performance of employees.

Wage growth has remained subdued in the March quarter. Average weekly ordinary time

earnings rose 2.3 per cent over the year to March. The LCI increased by 1.6 per cent for the

year to March, while average ordinary-time hourly earnings (as measured by the QES)

increased by 2.4 per cent. This, however, comes against a backdrop of very low inflation, with

the CPI increasing by just 0.4 per cent over the year.

Figure 16: Wage and salary inflation SOURCES: Statistics New Zealand Labour Cost Index, Statistics New Zealand Quarterly Employment Survey, Statistics New Zealand

Consumers Price Index

MINISTRY OF BUSINESS, INNOVATION & EMPLOYMENT 19 QUARTERLY LABOUR MARKET REPORT NOVEMBER 2015

quarterly labour market report may 2016 · 2016. 11. 4. · ministry of business, innovation &...

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