18 Aug 2016

Cautious optimism over latest employment figures

6:29 am on 18 August 2016

Analysts are confident the economy is creating more jobs, despite warnings that new employment figures need to be treated with care.

Two men in suits shake hands - close-up (file)

Latest figures show there were 58,000 jobs added to the economy in the three months to June. Photo: 123RF

Unemployment edged down to 5.1 percent, or 131,000 people, in the three months to June, while the economy added 58,000 jobs in the quarter.

Analysts were surprised by the sharp jump in jobs created.

"At face value the numbers look great. But there's so many caveats that it's almost best to put it to the side and move on," ANZ Bank senior economist Phil Borkin said.

But Statistics New Zealand admits a revamp of its survey means it doesn't know how many of the new jobs were due to reclassification.

The changes include reclassifying some people from not in the labour force to self employed and adding 10,000 defence force personnel who were previously excluded.

The agency has defended the changes, saying they present a more accurate and complete picture of the labour market.

ANZ senior economist Phil Borkin warned the data needed to be treated with care but said the growing economy was creating jobs.

"The labour market is getting better, the unemployment rate is trending lower. But there is still spare capacity that is weighing on wage growth. That's likely to be a gradual story that unwinds over the next few years if the economy still looks good."

"But in terms of what these figures can tell us, or anything new to that ... we'd be hesitant to make any strong conclusions," Mr Borkin said.

Employers and Manufacturers Association chief executive Kim Campbell was far more bullish, saying firms had been in a hiring mood.

"The early employment growth was looking at shortages for skilled people, managers, and so on, which is still strong.

"But now we're looking for concrete workers and unskilled labour. Very strong growth numbers. And that really reflects what we're seeing, the cranes around Auckland, the road building, and more importantly some of the investment we're seeing across the country in the productive side of the economy."

14072016 Photo: Rebekah Parsons-King. Hobsonville is booming. Around 20% of the homes being built here will be affordable homes.

The Employers and Manufacturers Association said firms had been in a hiring mood. Photo: RNZ / Rebekah Parsons-King

Council of Trade Unions director of policy Bill Rosenberg said unemployment fell by only 1000 to 131,000 between March and June despite the government trumpeting the strength of the economy.

"We should be down to under 4 percent by now. It could be the 3.3 percent it was in 2007. Even Treasury is saying it should be around 4 percent."

That reflected the record level of net migration which has boosted the labour supply, and kept a lid on wages, he said.

Dr Rosenberg said if those wanting work or more hours were added in the true jobless rate was closer to 13 percent and the government was not doing enough to get people into decent, well-paying work.

"That total of 342,000 people, who are the so-called 'under-utilised', is a huge figure ... and it's one that we should be very concerned about."

"It has been pretty stable for some time; in other words we're not reducing it. It only went down 3000 from a year ago which is not a good look," Dr Rosenberg said.

While employers say the demand for workers shows no signs of easing, Dr Rosenberg said the government should clamp down in immigration to open up more jobs for New Zealanders.