Job numbers up … or are they?

Monday, 29 June 2020

Job numbers were up in May, according to Statistics NZ, but one economist is urging the numbers be treated with caution.

Stats NZ said that, in seasonally adjusted terms, the total number of filled jobs rose 0.8 per cent in May, compared to the month before.

That was after a month-on-month fall of 1.6 per cent in April.

“May saw a turnaround in monthly total filled jobs. The full lockdown throughout April brought reports of businesses hibernating to try to weather the storm with assistance from the wage subsidy,” economic statistics manager Sue Chapman said.

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“Businesses re-opened as New Zealand moved to alert level 3 near the end of April and then to level 2 on May 13, bringing some people back to the workplace,” she said.

Women are suffering a greater reduction in employment.

The “filled jobs' measure is calculated based on tax data. It includes jobs that are subsidised by the wage subsidy scheme.

“The age group of 15- to 24-year-olds were more significantly hit by the job losses seen in April and seem to have had harder time recovering in May than the other age brackets. People in these age groups tend to be doing more part-time and casual work as well as studying,” Chapman said.

The number of filled jobs held by women fell more significantly in April and recovered to lesser degree in May than for men over the same period.

BNZ senior economist Craig Ebert said the Stats NZ figures seemed an 'incredible result' given the disruption of Covid-19.

“But even so, today’s report also showed total earnings for May down 11.8 per cent on an annual basis. This no doubt reflects the general loss of household purchasing power, by way of wage and salary cuts, even with employment numbers supposedly maintained.

“And, of course, all this was occurring in the heart of the multi-billion-dollar wage subsidy scheme. The real test is what happens to jobs and incomes as this costly programme is wound back, as it is starting to be.”

In the week ended June 19, there were 196,680 people on either the Covid-19 payment or Jobseeker Support, compared to 188,432 in the week ended May 15.

Ebert said official unemployment statistics from the Household Labour Force Survey (HLFS) might also underestimate the number of people out of work.

To be counted as unemployed people need to be actively looking for a new job. “Given the present climate many respondents to the survey might be tempted to say they are not actively looking for the foreseeable future. Importantly, this would leave them off the ranks of the HLFS unemployed and would show up in a crumbling participation rate.”

Ebert said that had happened in Australia, where the participation rate dropped to 62.9 per cent in May from 65.9 per cent in March.

Ebert said BNZ expected employment to shrink by 2.5 per cent in the June quarter compared to the March quarter.

“This would lift the New Zealand unemployment rate to 6.3 per cent in Q2, from 4.2 per cent in Q1, on the (bold?) assumption that the participation rate holds up at 69.8 per cent, from 70.4 per cent. If the participation falls noticeable more than this, it’s conceivable the Q2 unemployment rate doesn’t breach 6 per cent.”