This week's labour market statistics are likely to show recent business opinion surveys as being a little on the optimistic side.If you were to take those surveys at face value, you would expect this week's raft of labour market data to be moving in a pos
This week’s labour market statistics are likely to show recent business opinion surveys as being a little on the optimistic side.
If you were to take those surveys at face value, you would expect this week’s raft of labour market data to be moving in a positive direction.
Tomorrow sees the release of Statistics New Zealand’s quarterly employment survey and labour cors index: Thursday sees the release of the Household Labour Force Survey, which will provide updated unemployment numbers.
The most recent business opinion surveys have shown a net majority of businesses moving into the hiring rather than firing categories.
The labour market is always a “lagging” indicator. That means when a recession begins, it is almost always the last indicator to turn negative. Employers tend to cut other costs first.
Natural caution about whether a recession has actually ended, and how robust any recovery will be, also means employers do not begin hiring again until things have well and truly picked up.
This time, at least, there is a further lag – between employers’ intentions, as reflected in those business opinion surveys – and any actual adding of staff.
Even the economists putting those surveys together have noted there is already a lag between those intentions and the actual hiring taking place.
“Actual hiring is lagging behind hiring intentions and merchants aren’t restocking their shelves despite anticipating a surge in sales,” New Zealand Institute of Economic Research principal economist Shamubeel Eaqub said when the institutes’ most recent survey of business opinion was released four weeks ago.
“Until firms act on their expectations, the recovery will be shallow and gradual.”
There are anecdotes of a tightening labour market, says ANZ National Bank chief economist Cameron Bagrie, but these are patchy.
And they are unlikely to come out in this week’s data.
The Labour Costs Index out today is expected to show some increase in swages but slower than normal – a 0.4% rise in private sector wages over the quarter is the average of the market forecasts, taking the annual figure to 1.6%.
Unemployment is expected to continue to rise, with the average of the forecasts being 6.8%, up from September’s 6.5%.
It is important to remember the good news in all this. Unemployment has so far come in well under most predictions for the recession – all forecasts were for the figure to be well over 7% of the workforce by now.
The reason is our comparatively flexible labour laws have enabled businesses to cut back on the hours worked while still keeping people in employment.
The hours worked per person per week is well below the historical average – in fact, they are lower than at the end of the long recession in the early 1990s.
