Latest filled jobs figures for the month of May suggest the unemployment rate may well have risen again in the June quarter that's just finishing.
The primary sector was a little ray of sunshine in an otherwise still gloomy labour market during May.
The latest figures from Statistics NZ's Monthly Employment Indicators (MEI) show that in May, on a seasonally adjusted basis, there was an increase of 1689 jobs (a 0.1% rise) taking the number of filled jobs to 2.35 million.
That might look okay, but the reality is that this data series almost invariably sees figures revised down in subsequent months.
Indeed, the figures for April have now been revised down from an originally announced 0.1% drop in numbers to a 0.3% drop, while the March figures, originally announced as a 0.2% rise were a month later revised down to just a 0.1% rise and have now been revised down again to flat.
It all means that if the May slight rise is revised away in subsequent months, we'll have seen no months this year in which the job numbers overall have risen.
And that's after a 2024 calendar year that at one point saw seven consecutive months of falls.
The MEI figures are not directly comparable with the official unemployment figures as they are sourced quite differently - coming from Inland Revenue data - but they have tended to be quite a good indicator of future trends.
The official unemployment figures for the March quarter as measured by Stats NZ's Household Labour Force Survey showed an unchanged 5.1%. The unemployment rate was just 4.0% at the start of last year.
The June quarter figures are due out on August 6. The RBNZ's most recent forecast in the May Monetary Policy Statement (MPS) is for a 5.2% figure. The latest MEI figures look supportive of such a pick.
In fact, ASB economist Mark Smith said the filled jobs data points to "some upside risk to our 5.2% unemployment rate forecast".
"We expect hiring to remain anaemic over much of 2025, with firms likely to remain gun shy on expansion plans given the uncertain environment," Smith said.
"The global environment remains extremely uncertain and fickle despite strong performance by the primary sector.
"Low growth in the labour force is likely to temper the peak in the unemployment rate, which should remain in the low 5’s in the first half of this year. Recovering base economic momentum later in 2025 should see a pick-up in hiring and then see the unemployment rate recede before year end. Labour cost growth is expected to continue to cool as firms seek to contain the wage bill and this should dampen underlying CPI inflation," Smith said.
Stats NZ said changes in the seasonally adjusted filled jobs for the May 2025 month (compared with the April 2025 month) were:
- all industries – up 0.1% (1,689 jobs) to 2.35 million filled jobs
- primary industries – up 0.4% (439 jobs)
- goods-producing industries – down 0.2% (787 jobs)
- service industries – up 0.1% (1,990 jobs).
The relative strength in employment numbers in the primary industries sector again highlights the current starring role the primary industries are having in an economy that has generally speaking been struggling to gain traction, although GDP did rise 0.8% in the March quarter.
More recent high frequency data has, however, suggested there may have been something of a pause in the economy's momentum in the June quarter about to end.
But as the most recent monthly goods trade figures show, our primary exports - particularly in dairy, meat, and fruit - are still performing strongly.
In terms of the actual, unadjusted, MEI figures compared with May a year ago, Stats NZ said filled jobs were 2.35 million, down 34,237 jobs (1.4%).
Again, younger people have borne the brunt of the reduction in jobs, with 12,480 few jobs (down 9.9%) among those aged 15-19.
By industry, the largest changes in the number of filled jobs compared with May 2024 were in:
- construction – down 6.2% (12,723 jobs)
- administrative and support services – down 5.6% (6,126 jobs)
- professional, scientific, and technical services – down 3.1% (5,975 jobs)
- manufacturing – down 2.1% (4,896 jobs)
- accommodation and food services – down 2.2% (3,525 jobs).
By region, the largest changes in the number of filled jobs compared with May 2024 were in:
- Auckland – down 1.9% (15,274 jobs)
- Wellington – down 2.2% (5,822 jobs)
- Waikato – down 1.0% (2,305 jobs)
- Bay of Plenty – down 1.3% (1,955 jobs)
- Manawatū-Whanganui – down 1.7% (1,920 jobs).
15 Comments
This from an article in the Guardian describing UK Finance Ministers fiscal policy decisions - eerily similar to Nichola Willis BTW.
"Take the governments fiscal stance. Despite promises of transformation, departmental budgets will grow more slowly than under the last parliament. This isn’t mere prudence; it’s the codification of a false scarcity – engineered not by inflation or investor panic, but by a Treasury framework that treats self-imposed constraints as natural laws.'
In the last few weeks CH said Labour is focused on jobs. I'm sure they, 10,000 plus more civil servants no doubt. Not nurses, doctors, police and teachers but the administrative sort. A figure has been bandied about by various interest commentators. I thought the figure was about 13,000 that Labour had bumped up the civil service but someone mentioned 18,000 while Labour was in govt. Lets take the lower figure of 13,000 and take a stab at nurses, doctors, police and teachers. Say 5000 new jobs, nor replacements. That still leaves 8,000 administrative types. Still quite a big number.
Is it better for the economy in NZ to have 13,000 middle class public sector workers all spending their money into the private sector - their incomes do not go any where else. Or remove those incomes from the NZ economy altogether? What is the likely economic outcome of removing 13,000 incomes and the spending that goes with it?
Is it better for the economy in NZ to have 13,000 middle class public sector workers all spending their money into the private sector - their incomes do not go any where else.
It's a good question and something I once put under the Reductio ad Absurdum test. For ex, imagine you have a room of 100 bureaucrats sitting in a circle passing pieces of paper continuously to each other. Most people would say this is ridiculous and entirely unproductive, therefore it is entirely unproductive in an economic sense.
But as you point out, these people all contribute their incomes to the private sector economy.
Therefore, following logic, it's better to have the 100 bureaucrats passing the paper than not having them. Of course, many people would see this as a completely wrong sitn to have.
At present, public sector and government-supported jobs have driven almost all employment growth in Aussie over the past year. In 2024, of the 484,000 new jobs created, only 99,000 were in the private market sector - about 80% of new jobs were in the public sector or non-market (government-funded) sectors.
Employing public sector workers doesn't mean they have nothing productive to do - I think that's a fallacy. There is probably very similar amounts of waste and non-productivity in both public and private sector entities.
The Australians are practicing standard Keynesian economics - when the private sector isn't doing it the government steps in, to make use of under-utilized capacity (labor and resources) in the economy to get stuff done - modernizing infrastructure in particular. The Australians have done this for decades and have never used a recession and high unemployment to push-down wages.
The Australian government also posted surplus because government spending and high wages boosts economic growth which in turn increases tax revenue.
Employing public sector workers doesn't mean they have nothing productive to do - I think that's a fallacy.
I think you missed what I said about the "Reductio ad Absurdum test", even though I clearly stated it. Can you point out the logical fallacy in the conclusion that it's still a positive economic outcome?
The Australians are practicing standard Keynesian economics
Interesting to note that public sector wages in Australia have grown at their fastest rate in 15 years, with an 8% increase in the last financial year and a total wage bill of AUD232 billion AUD on 2023-24. This reflects both rising pay and a growing workforce, with over 365,000 Commonwealth public servants and significant state and local government employment.
https://www.abs.gov.au/media-centre/media-releases/public-sector-employ…
.....modernizing infrastructure in particular. The Australians have done this for decades and have never used a recession and high unemployment to push-down wages.
Australia has an infrastructure deficit across a wide range of measures. This is most obvious in housing that has been exacerbated by immigration. Ironically. this immigration exists to suppress labor costs in the private sector (migrants have natural barriers to the lucrative public sector sector).
According to the IMF, Australia faces an infrastructure investment gap averaging about 0.35% of GDP per year through 2040. This gap represents the difference between current investment trends and what is needed to meet projected infrastructure requirements. Cumulatively, this amounts to a 10% GDP shortfall over 2016–2040, or about USD1.7 trillion in infrastructure needs versus USD1.54 trillion in projected spending.
https://www.elibrary.imf.org/downloadpdf/view/journals/002/2018/045/art…
Thanks Phoenix - they are both excellent comments with the evidence. The average voter and NZ economic commentator has almost no clue about government spending as part of the overall economy. There is an unspoken rule in NZ that states fiscal policy is irrelevant to the economy at best, and an actual detriment at worst.
What a surprise! Who'd have guessed that when the government cuts jobs, spending and investment the economy tanks. It's not like Keynes worked this out in the 1930's. We were all thinking the opposite was going happen and the private sector was going to thrive without all the irritating government spending and the huge boost of tax cuts we all got.
Don't worry things are going improve in the second half of this year - after unemployment peaks at close to 6% and the government completes another round of spending cuts. I'm sure it will work this time.
No-one is going to rush to borrow and spend when un-employment is heading towards 6%. When I talk to people in the business sector they are flat and laying off staff. The employed are seeing their colleagues being made redundant with regularity and this is going to freeze consumer spending in the domestic economy.
It's a mixed bag out there from my limited view. Those in secure middle income jobs are still living like nothing has changed, even looking for, and finding better work. At the same time employers all point to a slow economy, layoffs, hours being cut back, sales low. Something tells me there is more than a little influence of generational wealth at play as to the variety of current lifestyles however. Those with no or lower mortgages with help from the folks have greater discretionary income to splash - any other opinions around this?
Thanks interesting. I think it's 'the fear of unemployment' that contracts spending - there are plenty of middle income layoffs happening as well - especially in the public sector. This, inevitably, creates a climate fear for anyone still holding a job. Agreed, there are plenty with sufficient savings or income to ignore what's going on - but eventually returns on savings and income fall in a weakening economy,
I think it's 'the fear of unemployment' that contracts spending
Agreed tat it is one factor. But with ~24% cumulative inflation since 2020 Q1 according to RBNZ, many have had their discretionary income eroded by cost increases, lack of comparable wage/salary growth, and increase in mortgage costs. Many will be weighing opportunity cost much greater now than previously and making wiser financial decisions at the expense of otherwise unnecessary spending and also due to sheer lack of disposable income relative to previous years. Keep up the productive discussions :-)
No mortgage now (and no help from the folks) but I did have a very narrow brush with redundancy last year and testing the market wasn't fun. So I'm saving or investing most spare money now to create a financial moat.
And medium to long term I'm seriously wondering about the impact of AI on jobs for my kids.
I bet last quarters gdp will be the next to get a write down.
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