Covid-19 job losses: 'That's probably it'

Friday, 13 November 2020

Infometrics economists discuss the prospect of another recession, but house prices staying firm.

New Zealand may have seen the last of the Covid-19 job loss surge, commentators say.

In the week ending November 6, there were 137,147 people receiving either Jobseeker Support – Work Ready or the Covid-19 Income Relief Payment. That’s still well up on the 81,976 on the benefit in late March, but the numbers have been dropping in recent weeks. For the last week alone, 1086 fewer people were receiving the Work Ready benefit than in the week before.

When people on other types of Jobseeker Support are included, that increases to 211,509 but that number is still down 857 week-on-week and down from 222,038 in late August.

ASB chief economist Nick Tuffley said it was likely there would be a small lift in job losses in the December quarter.

* Māori women took hit in first wave of Covid-19 job losses, Stats NZ data shows

The sharp employment shock of April has passed.

* Coronavirus: Extent of Covid's economic hit to the top of the south revealed

“That’s probably it…. We were anticipating there would be another potential round of job losses when the wage subsidy ended if businesses were under pressure. But we’re even starting to see in the hospitality sector over October spending on cards in hospitality was back to records and it’s holding up relatively well.”

He said the unemployment rate could lift next year but that would because the rate of new job growth would not keep up with population growth to the same extent it would in a stronger economic environment.

The country is starting to see spending soften, one economist says.

Infometrics economist Brad Olsen said the data showed people were finding work and not as many were losing jobs.

“There’s still activity out there as we head into Christmas.”

But he said things could get tough over summer when there were no international tourists.

“We are starting to see spending soften.”

Data from the Ministry of Business, Innovation and Employment showed consumer spending down 3 per cent in the week of November 1, and then a drop the week following.

Another economist, Shamubeel Eaqub, said the pressure on the economy now was more like a normal recession, rather than the sharp shock of earlier in the year.

At NZIER, principal economist Christina Leung said she forecast the unemployment rate to peak at just over 7 per cent around the middle of next year, with the discouraged worker effect limiting the extent to which the unemployment rate rises.

“We expect some will drop out of the labour force to retrain or go into early retirement.”