Despite our forecast being almost spot on, it gives us no pleasure whatsoever to see the official unemployment rate rise to 7.3%. Actual official unemployment totalled 170,000 in September, up from 151,200 this time last year.
Adding to the bleakness is the increase in the number of ‘other jobless’ – that is, those without a job, but who do not meet the strict criteria to be classified as ‘officially unemployed’. The number of ‘other jobless’ has risen from 103,100 a year ago to 125,000 now.
That’s a total of 40,700 added to jobless numbers over the past 12 months.
These numbers add further to the compelling evidence that the New Zealand economy is increasingly fragile.
Similarly sobering are the employment numbers, showing only a 1,800 increase over the past 12 months. Growth in job numbers has clearly slumped. Further weakness is confirmed when noting that full-time job numbers have declined by 16,800 over the past year.
Without changes to our policy settings, the short-term picture is not pretty, with our models projecting even further rises in jobless numbers.
With the export sector in serious strife and little demand from the domestic economy, the wisdom of the government pursuing its budget surplus target must be seriously questioned.
A change of course is urgently required if New Zealand is to avoid yet another damaging recession. Policy targets need to be refocused on resuscitating the export sector, bringing the current account deficit under control and avoiding deflation.