Job ads, which had been running hotter than hot, have declined for the fourth month in a row and are down by about a quarter on what they were a year ago - suggesting that the expected sharp cooling in the labour market is under way.
According to the July BNZ & SEEK Employment Report, SEEK job ads fell 3.9% in July on a seasonally adjusted basis. That is the fourth consecutive monthly decline, and Job ads in July were 25.8% lower than a year earlier.
Auckland job ads are now running at lower levels than before the pandemic.
The NZ jobs market has been searingly hot as employers struggled to fill vacancies during the pandemic when the borders were closed. Employees have been able to claim wage rises to meet strong inflation.
The unemployment rate has been well under 4% for over two years, having dipped as low as 3.2%. However, in the June quarter it blipped up to 3.6% from 3.4%, despite very strong employment levels, with 28,000 more jobs filled in the quarter.
But the borders are open again and migrant workers have been flocking in - soaking up much of the previously unmet demand for staff.
The Reserve Bank, which needs to see 'slack' in the labour market in order to help get inflation back to its 1% to 3% range (annual inflation was 6.0% as of the June quarter), has forecast that there will be a sharp rise in unemployment in the second half of this year. Its most recent forecast (in May) was for unemployment to go up to 4.1% as of the September quarter (that we are now in) and to be 4.6% by the end of the year.
BNZ senior economist Doug Steel said looking across industries, the decline in job ads in July was more broad-based than it was in June.
He said job ads fell in most regions in July, albeit to varying degrees. The exception was a small gain in the West Coast.
"Auckland remains notable as the only region posting a level of job ads clearly below pre-covid levels (of 2019). Wellington job ads have slipped to be near that benchmark in July, while all other regions remain above 2019 levels."
Steel said SEEK’s candidate availability measure continues to trend strongly upwards, to "now quite elevated levels".
"It suggests the very tight labour market conditions of last year have gone.
"Such rapid change is not yet obvious in New Zealand’s unemployment rate, to date. However, the increase in applications-per-ad has certainly been reflected in business surveys suggesting labour is less difficult to find. A trend higher in applications-per-ad is evident across all regions and most industries. Two exceptions are CEO & General Management and Legal."
Job ads for the majority of industries fell in the month. For some, like Consulting & Strategy, a very large drop in July followed a sizeable increase in the previous month. But for others such as Manufacturing, Transport & Logistics and Call Centre & Customer Service, July’s drop added to those seen in June. There were some pockets of increase, with Sport & Recreation and Administration & Office Support each posting a 5% gain in July.
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