Brad Olsen: Infometrics Principal Economist on what the new unemployment figures mean for economic recovery

A warning we've been burnt by high hopes for economic recovery. 

Stats NZ data out today puts unemployment at 5.4 percent in the December quarter. 

The numbers were less severe than forecasts from Treasury, but still reflect a 10 year unemployment high. 

Infometrics Principal Economist Brad Olsen says the talk about getting momentum back last year fell short.

"For businesses, they need to see stronger business sales coming through their front door before they commit to hiring more workers." 

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Episode Transcript

Speaker 1 (00:09):
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(00:29):
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Speaker 2 (00:35):
Unemployment has reached a ten year high of five point
four percent, up from five point three. This takes us
back to a level we haven't been at since September
twenty fifteen. But it's not all bad. Informetrics are seeing
some good under that hood, and the chief executive, Brad
Olsen is with us. Now, Hi, Brad, good evening. What
are the numbers that you like here?

Speaker 3 (00:53):
Well, the biggest one for us is the fact that
employment rowse a fairly strong point five percent in the quarter,
so we did actually see more jobs activity. The reason
that that unemployment rate also increased, though, is because participation
rose from seventy point three to seventy point five. What
that means is there's a whole bunch of people who
previously they weren't counted as unemployed because they were out

(01:15):
of the labor force. They weren't looking for work, they
weren't available. Now there are a few more jobs starting
to come around. They are making themselves available to get
back into work, but they're now counted as unemployed whereas
they weren't before, which has lifted that number so effectively
you are starting to see a bit more of an
improvement in that job's trend. It's just the meaning that
you've both got more people who are looking for jobs

(01:37):
as well as those who are actually getting them.

Speaker 2 (01:39):
Now a lot of the jobs that have been added
appear to be part time jobs. Is that a sign
that employers are just sort of dipping their toes but
not fully confident yet.

Speaker 3 (01:49):
Yeah, it does seem to be part of that. I
mean fifty five percent, so just over half of the
new jobs we saw in the quarter were part time roles,
and it does suggest that. Look, when you look at
the number of hours being offered out there, it's not
particularly strong yet and probably consistent with the fact that
the job add numbers, the number of roles being advertised
hasn't really jumped up strongly either, So there's a bit

(02:12):
of a turn, but it's sort of not as forthright yet,
which also comes in when you look at the underutilization rate,
so slightly broader than unemployment. It looks at the number
of people who don't have a job, those who have
a job that would like to work more hours, and
those who are not currently looking but they probably could
be convinced into it. That rate was steady at thirteen percent,

(02:33):
which does suggest you're sort of seeing people who weren't
previously looking are now looking. Those who were looking already
have maybe have got a job but on reduced hours,
but they are looking for more. So some encouraging signs
at least better than that five point four percent unemployment
rate might suggest, but again not necessarily absolutely rapidly firing
labor market momentum.

Speaker 2 (02:54):
You know, listen, just that business about the employers that
are dipping their toes and not having full confidence to
go full noise into full employment. What is going on
here with our recovery. Why are we being as wobbly
as we are at the start of this year.

Speaker 3 (03:06):
Well, I think it's possibly because we got burnt a
bit with the expectations of recovery last year. You know,
we talked about twenty five and about getting momentum back
and it just didn't really get under weigh as much.
And I think there's still a bit of a you know,
circular thing here where for businesses they need to see
stronger business sales coming through their front door before they
commit to hiring more workers.

Speaker 2 (03:28):
But so, Brad, are we sizing up that RB governor
before we're sure of what she's about?

Speaker 3 (03:33):
Well, a little potentially, but I suspect we're probably more
sizing up that uncomfortable inflation to start with, Like probably
no matter who the governor would be, three point one
percent inflation does sort of set the catamacs of pigeons
a little bit. You saw what the Reserve Bank of
Australia had to do yesterday in terms of lifting rates.
But I think probably all of this boils down for
households that they're seeing that you know, inflation figure coming up.

(03:55):
They're still uncertain about their job prospects, and that means
that people are still acting fairly cautious. So until that
turns around. We did see a little bit more data
showing consumer confidence has bounced a bit higher, but I
still think people are a little bit shy, a little
bit cautious so far, and that's extending to businesses and
they're hiring too.

Speaker 2 (04:12):
It's good to talk to you, Brad. As always, Thank you,
Brad Elson, CEO of Informetrics.

Speaker 1 (04:17):
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