NEW ZEALAND: Sharp Drop In Employment As Redundancies Increase

Q3 labour market data showed that the weak economy is weighing on jobs with employment falling 0.5% q/q and Q2 revised down to +0.2% q/q, weaker than expected, leaving annual growth down 0.4%. But the unemployment rate rose less than expected as the participation rate fell more than forecast. Despite the unemployment rate printing below RBNZ expectations, the data is weak enough for another 50bp cut this month.

NZ employment y/y%

• The Q3 drop in employment was the sharpest since Q1 2009 outside of the pandemic period and was a crisis time. The softening of the economy is not only reducing labour demand but now seems to be resulting in job shedding.
• Statistics NZ notes that “compared with last September quarter, there were about a third more people reporting they had left their last job through redundancies or business shutdowns.”
• The data breakdown reflects weak growth with full-time employment down 0.7% q/q and 0.7% y/y after -0.2% & flat in Q2. Part-time is stronger as it was flat on the quarter and up 1.0% y/y but down from 1.2% y/y. There is some labour hoarding still but hours are being reduced to reflect less demand. They were down 1.1% y/y after -0.7% y/y.
• The unemployment rate rose 0.2pp to 4.8% lower than the RBNZ’s 5% August forecast, but it is still the highest since Q2 2017 outside of Covid. The participation rate fell 0.5pp to 71.2%, which may reflect some discouragement, but Statistics NZ says that the main reasons were leisure, studying/training, and illness. 

NZ unemployment rate %