A somewhat clearer picture of the labour market will begin appearing this week.
And that picture should show a discernible rise in the rate of unemployment, perhaps to around 5.5%.
What is reasonably clear is that the wage subsidy in particular has cushioned the blow from the Covid crisis to date and to this point job losses in New Zealand have not been as extreme as was feared earlier in the year when economists were pointing towards perhaps double digit percentages of unemployment.
Statistics New Zealand's labour market release for the September quarter is out on Wednesday (November 4) and all things being equal should show a rise in the unemployment rate - and economists think it will be heading over 5%.
Remember, however, that the June quarter release produced a monumental surprise, with an unemployment rate that actually FELL to 4% from 4.2%.
This of course was during the period in which large parts of the economy had ground to a halt while we were all locked down.
The lockdown was a big part of the problem - making it very difficult for Stats NZ to measure in the usual way what the rate of unemployment actually was during a period in which people who might have lost their jobs couldn't actually be actively seeking work.
For the September quarter Stats NZ will have had a much clearer run at collecting the data - so, we should get a better read on what the situation is - though there's still likely to be what what the economists like to refer to as 'noise' in the figures.
ASB senior economist Mike Jones is expecting a 0.7% fall in employment over the quarter. Coupled with a 0.5 percentage point rebound in the labour force participation rate (to 70.4%), this would deliver an increase in the unemployment rate from 4.0% to 5.4%, he says.
"This is very unlikely to be end of the rising unemployment trend (we have the peak pegged at 6.5% in June 2021). Things will get tougher. This being the case, we suspect it would take a fairly big surprise from the data to change the Reserve Bank or anyone’s view about the labour market. The [central] Bank is already aggressively responding to the expected continued slackening in the labour market over the coming 12 months.
"There’s usually a pretty close link between economic activity and the jobs market in any given quarter. However, the wage subsidy has changed all that. The quick deployment and massive size of the subsidy undoubtedly cushioned the blow of the recession on the labour market. Some of the gloomier unemployment predictions have thus been revised to more palatable levels. But as wage support started to roll off from June, joblessness has increased."
ANZ senior economist Liz Kendall and economic statistician Kyle Uerata say their "best educated guess" is that the unemployment rate will come out at 5.2%-5.4%.
"With challenging times ahead and temporary supports rolling off, we expect the labour market to deteriorate further. But for now, the picture could have been much worse," they say.
"There are a wide range of possible outcomes for the unemployment rate this quarter, after Q2’s surprise decline from 4.2% to 4%. Last quarter, weakness in the labour market was understated, difficult to measure, and masked by disrupted labour force participation. Without the abrupt shift seen in the participation rate, the unemployment rate might have printed at 4.6-4.8%."
They say the unemployment picture would have looked a lot worse if not for the wage subsidy and other supports.
"That said, the data has plenty of scope to surprise us, with a wide range of plausible outcomes for employment (-0.7% to +0.4%) that could see the unemployment rate in the range of 4.4-6.1% (table 1).
"We can also imagine the data printing outside this range, though we don’t consider it likely. How we interpret data on the day will depend on the extent to which the data appears to be impacted by noise. And to some extent, we – and policymakers – will look through whatever the data throws up, waiting to see the scale of further deterioration as supports continue to roll off and the economic recovery stagnates."
The ANZ economists say broadly speaking, an unemployment rate near their expectations would be consistent with the labour market undergoing a modest deterioration - that they then see accelerating in the fourth quarter and continuing over 2021.
"Stronger employment and a lower unemployment rate than we expect would imply the economic rebound and wage subsidy have provided more support, pointing to a better starting point ahead of the challenging time to come. On the other hand, weaker employment and higher unemployment would point to a faster deterioration and less resilience as supports wane."
They say that overall, conditions look set to get tougher and this week’s labour data are unlikely to change that broader picture.
"We expect employment growth to remain weak and that unemployment will eventually peak at 7.5% at the end of 2021."
Westpac senior economist Michael Gordon is expecting this week's figures to show that the unemployment rate to rose to 5.5% in the September quarter.
"The June quarter results will have understated the impact of Covid-19 on unemployment. Even so, the impact has been much less than initially feared, with the economy rapidly rebounding from lockdown conditions. Wage growth is likely to remain muted.
Gordon says pinning down the impact of Covid-19 impact on the New Zealand labour market has been difficult. The September quarter survey, however, was "relatively free of Covid disruptions and measurement issues" (though some restrictions were re-imposed in August), "so it should give us a cleaner read on labour market conditions".