Unemployment likely to rise after weaker confidence index: Westpac

'Workers are telling us that it is becoming harder to find jobs'

Unemployment likely to rise after weaker confidence index: Westpac

Unemployment is predicted to go up for the remainder of the year as indicated by the declining confidence from households on the labour market, according to a new report from Westpac.

The employment confidence of New Zealand households fell by 7.4 points to 98.3 in the September quarter, as per the Westpac McDermott Miller Employment Confidence Index (ECI).

This is the first time since March 2021 that households have a negative view about the conditions in the labour market, according to Westpac, and the lowest reading for the ECI since December 2020.

"This measure often provides a lead on the direction of the unemployment rate. The latest reading suggests that unemployment will rise further over the remainder of this year," said Westpac Senior Economist Darren Gibbs in a statement.

New Zealand's unemployment rate is at 3.6%, according to data from Stats NZ, with the number of unemployed people at 109,000.

Low opportunities, tighter competition

The decline on employment confidence has been attributed to the current job opportunities in New Zealand, which the report said sank by 19.3 points in September.

"In part this may reflect a reduction rate in the rate of growth of new job opportunities, as suggested by job vacancy data and hiring intentions indicators in business surveys," the report said.

The situation could also be pinned on tighter competition for roles as New Zealand reopened its borders for international talent. In fact, SEEK NZ recently revealed that applications for job ads broke a new record in July after climbing two per cent month-on-month.

"Workers are telling us that it is becoming harder to find jobs," Gibbs said.

According to the report, employees aged between 30 and 49 registered the largest decline in employment confidence with an ECI of 94.1, a drop of 10.5 points from the previous quarter.

ECI among individuals aged above 50 dropped 7.8 points to 97.7, while younger people (18 to 29) had a 101.8 ECI after a drop of 2.5 points.

Individuals aged between 30 and 49 now have the lowest index score among the respondents since September 2020, according to Imogen Rendall, Market Research Director of McDermott Miller Limited.

"Concerns across the age groups centre most strongly around job availability and future job opportunities. However, the older age groups are also worried about their own personal job security over the coming year," Rendall said in a statement.

'No surprise' for employers

Westpac's findings come as no surprise for the Employers and Manufacturers Association (EMA), according to its statement on Wednesday.

EMA Head of Advocacy Alan McDonald said the findings echo the comments of rising costs that they've been getting from their members.

"We are already getting a steady stream of enquiries through our AdviceLine from members considering their staffing options, while our legal services team are increasingly being asked for advice and support around restructuring proposals," McDonald said in a statement.

"While we might not be in a technical recession, for many people it feels like we are. It therefore comes as no surprise that households are also feeling increasingly pessimistic about the economy and the state of the employment market."

The EMA head then urged the incoming government to work with businesses and listen to their concerns in its effort to reduce the costs of doing business and getting the economy back in shape.

"When business does well, the economy does well and that is good news for everyone because a strong economy supports new jobs, higher wages and an increased ability to spend on social services we all need," McDonald said.

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