Source: Radio New Zealand
A total of 163,000 people were unemployed in the new data. 123rf
An economist is warning the unemployment rate is likely to get worse in the coming months and could reach up to 6 percent due to the Iran War.
The unemployment rate eased to 5.3 percent in the three months ended March, down slightly from the previous quarter.
A total of 163,000 people were unemployed, a fall of 2000 on the previous quarter but 7000 higher than a year ago.
Kiwibank chief economist Jarrod Kerr said Wednesday’s data was “very outdated”, and the full impact of the fuel crisis would be felt in the second or third quarter of this year.
Kiwibank was forecasting unemployment to reach 5.5 per cent, Kerr said, but there was a chance it could reach 5.8 or 6 percent if conditions didn’t improve.
Kiwibank chief economist Jarrod Kerr Supplied / Gino Demeer
“We are hearing of [construction] projects being post-poned, we are hearing of projects being cancelled, we are hearing of forestry crews being stood down because it’s too expensive to cut-down trees at the moment.”
He expected both surging air fares and flight cancellations in the wake of the Iran War to dent the tourism industry, including the regions, which had recently been performing well due to a strong export market.
“Tourism is the one we don’t hear a lot about. It was our largest exporter prior to Covid, more than dairy. Now dairy’s our number one.
“New Zealand’s got such a large tourism sector, so for that to be falling back, it’s a big negative for large parts of the country.”
Kerr noted the numbers of people who were employed but needed to work more hours – the underutilisation rate – which was stubborn at 12.9 per cent.
That wasn’t a good sign, he said.
“Businesses, they cut hours before they cut heads…so you’ve got a workforce, you’ve trained them, in many cases you’ve worked with them for years, and a crisis hits – you cut their hours before you cut their jobs…that’s where the slack shows up first.”
ASB chief economist Nick Tuffley told Midday Report said he expected the unemployment rate to reach 5.5 percent and would briefly stall the employment growth evident at the beginning of this year.
Bay of Plenty unemployment rate ‘surprising’ – mayor
Auckland, Wellington and the Bay of Plenty had the highest unemployment rates in the latest figures, between 6 and 7 percent.
Bay of Plenty’s unemployment rate had increased to 7.1 percent in the March quarter, from 5.7 percent in the previous quarter.
Rotorua Mayor Tania Tapsell said she was “very surprised” to see the Bay of Plenty’s unemployment rate rise, and would be looking into why it had increased.
“I know that as a region we are actually doing quite well, and I hear from businesses that they are seeking employees as well – so again [I’m] very surprised.”
She said it was concerning to hear families could be struggling.
Some conference and business events in Rotorua were looking at postponing due to the effect of fuel costs, Tapsell said, but in general, tourism in the city was “booming”, and domestic flights hadn’t been cut.
But Tauranga chamber of commerce chief executive Matt Cowley said tourism in the Eastern Bay of Plenty had been “patchy”, forestry was “doing it tough”, as well as some manufacturers exposed to the domestic market.
He cited Ballance Agri-Nutrients decision to end manufacturing operations in Mount Maunganui, and cut 60 jobs, as one example.
“Hospitality has been somewhat contracting due to reasonably tough summer periods,” Cowley said.
Auckland and Wellington’s unemployment rates remain high – Auckland’s increasing from 6.4 to 6.6 percent in the March quarter, and Wellington’s from 5.8 to 6.3 percent.
Kerr said Wellington had been in a “very dark place” over the last couple of years, due to public sector job cuts.
He said surveys consistently showed Wellington businesses were “downbeat”, and Auckland, “not that much better”.
He compared that to Canterbury where unemployment rates were 4.4 percent in the March quarter – up from 3.7 percent in the previous quarter – but the region was generally performing better than the North Island cities.
“I think Auckland and Wellington, they need to do something to drag themselves out of this funk that they’re in.”
Finance Minister Nicola Willis said in any economic recovery, unemployment was the last thing to recover.
“You’re seeing that it is in the cities that that recovery has taken the longest to turn around. What we do see is the signs are there that the recovery is starting to latch on in those cities.”
Willis said some businesses had been expanding, selling more and creating more jobs.
“What we need to do is give them every chance of continuing that in the months ahead, notwithstanding the events in the Middle East.”
Labour’s Finance spokesperson Barbara Edmonds said the statistics were “nothing to sing about,” even though the headline figure had come down.
“If you scratch a little bit deeper, that’s 163,000 people who are out of work, and the unemployment levels being higher in Auckland now than it was 11 years ago, higher in Wellington than it was 12 years ago.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand