Political & Economic week that was: will the unemployment rate get above 6%?
NBR Political & Economics Editor Rob Hosking breaks down the week that was on NBR Radio and on demand on MyNBR Radio.
Economically, there was further confirmation of a slowdown this week.
The latest data on growth showed 0.4% for the quarter, which was below what most economists – including the Reserve Bank – expected.
There were some good points in the figures: housing and construction stayed up, and investment still appears to be running strong.
Today’s ANZ job advertisements further confirm a slowdown – they are still growing, but the trend is slowing.
That is probably the biggest political risk in the current slowdown. Unemployment has begun to rise because although the number of jobs are still growing quite quickly, the size of the workforce is growing even faster, driven mostly by strong net immigration.
The new jobs are at the higher end of the skills scale – which is why despite rising unemployment there are emerging skills shortages in a number of areas.
Firms have become more efficient in recent years – business investment picked up quickly after the global financial crisis and the strong New Zealand exchange rate, coupled with low interest rates, allowed New Zealand businesses to import capital equipment, plant, machinery and ICT.
That has meant fewer low skilled jobs.
At a political level, that will put more pressure on the government over the next two years. Unemployment, instead of dropping towards, or even below, 5% of the workforce, as appeared to be happening a year ago, bottomed out towards the end of 2014 at 5.4% and is now just below 6%.
It is not going to drop for a while: the next update will almost definitely see the jobless rate go above that 6% mark, as provincial New Zealand takes a hit from the lower dairy price and farmers curtail their spending.
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NBR Radio
Fri, 18 Sep 2015
Fri, 18 Sep 2015
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Political & Economic week that was: will the unemployment rate get above 6%?
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