Economy paradox: Jobs hopes highest in Auckland where business is most pessimistic

Business confidence may be falling but that sentiment isn’t shared in the workplace.

In June, the Westpac McDermott Miller Employment Confidence Index rose 1.5 points to 117.4, its highest since the global financial crisis.

Also in contrast to business confidence readings, Auckland is the most upbeat of the 11 regions about job prospects in the future while having the most pessimistic outlook for business in the latest Westpac McDermott Miller Regional Economic Confidence Survey.

The second most confident region for employment is Nelson-Marlborough, which has bounced back after adverse weather in the early part of the year. That region ranked highest in business confidence.

Employment confidence has also risen in Canterbury, Wellington, Waikato and Gisborne-Hawke’s Bay.

The lowest level of confidence is in Taranaki-Manawatu-Whanganui,while it also fell in Otago, Southland and Bay of Plenty.

“New Zealand is now into its eighth year of continued expansion and the unemployment rate has fallen to the lowest level in a decade,” Westpac chief economist Dominick Stephens says.

“This firmness in economic activity has seen households reporting increased job opportunities. They are also feeling more secure in their jobs.”

But this may not last.

“Households are telling us that they think job openings will get a little harder to find over the coming year,” he says. “This easing has been modest to date, but it comes atop of other signs that economic growth is slowing. It adds to indications that the unemployment rate may struggle to push lower from here.”

Household earnings outlook softens
Mr Stephens says households’ earnings growth remains a soft spot for the labour market.

This comes from other signs that the pace of economic growth is slowing – retail spending is leveling off and the growth of online job advertisements is softening.

The latest NZIER Quarterly Survey of Business Opinion noted companies did not expect to recover all of their extra costs with prices rises, which could lead to a decline in profitability.

“Despite an extended period of firm economic growth, the number of households who expect their earnings to rise over the coming year remains low,” Mr Stephens says.

Perhaps surprisingly, McDermott Miller managing director Richard Miller says employers in the private sector are more optimistic than their public sector counterparts.

“In particular, more private sector respondents believe that ‘jobs currently are plentiful’ than do their public sector counterparts (private sector 119.2 compared with public sector 115.3),” he says.

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