Employment growth continues to fall. It dropped from 43,000 a year ago to just 12,000 in the 12 months to June 2012. That 12,000 increase is nowhere near enough to employ the increase in the number of people who want to work. Even this meagre employment increase could well become negative in the next six months if the trend over the last year continues.
Where are we hurting?
The red blood cells are seeping out of more of our industries. Of the 86 industries BERL monitors, in the 12 months to June 2011, 30 of them had lost jobs, about one-third of them. This year to June 2012, 48 have lost jobs, or well over half (56 percent).
We are not going to get into surplus in our part of the economy, that is the export–import balance which is so important for growth. The high exchange rate will stop that growth by cutting jobs out of exporting and manufacturing. Everything being slack, including the start in the Christchurch rebuild, has cut construction jobs. Of the 30 industries across this part of the economy 20 industries experienced job losses over the last year, which is two-thirds of this part of the economy!
The Government is still determined to get into surplus in their part of the economy. That is the other drag, sucking the red corpuscles out of our growth. In the public end of administration and social services, there were eight industries out of 13, or 62 percent that lost jobs.
Local trade, transport and services weren’t quite so bad and under one half of those 27 industries lost jobs. The administrative service and computer services sectors grew, presumably on the back of the public sector contracting this work out.
The volume of work is at best stagnant
We measure the volume of work as Full-Time Equivalents employed, or FTEs. We track this volume through two surveys carried out by Statistics New Zealand. The Quarterly Employment Survey measures jobs at firms’ workplaces. It omits self-employed and farmers, so covers about 70 percent of workers. The other survey measures the number of people in our households who are in jobs, and records about 2.22 million employed, about a quarter of whom are part-time, so the total FTEs are about 1.96 million. Usually when employed jobs dry up, some people endeavour to be ‘self-employed,’ so the household-measured number holds up for awhile before bowing to the inevitable.
That has been happening recently as we can see from the track of the green line on the chart. There is no sign of growth emerging in the volume of work.
How many jobs do we need to keep up?
Our Working Age Population is increasing by about 33,000 people a year, and the labour force participation rate is about 69 percent as a pro rata. If we are going to just stand still on our employment rates, our economy has to grow by 23,000 jobs a year.
Our one safety valve in this situation is net outward migration. However, with Europe’s problems continuing we are seeing a net inflow passing through the 18,000 a year mark, with people moving from Europe and the Americas to New Zealand.
This flow, and the inflow from Asia means that the outflow of 173,000 people to Australia over the last four years, at a rate of 43,000 a year (now passing 53,000) has not been sufficient to reduce the pressure on our labour market.
The number of people unemployed continues to increase, and 6.6 percent of our labour force are now unemployed. If we don’t get our economy into some strong aerobic exercise, or get it a blood transfusion, the present anaemic performance will see the unemployed numbers grow, with that rate up well into the seven to eight percent range over the next two years.