Employment declines
May 8th, 2008 at 2:08 pm by David FarrarToday’s release of the March 2008 Household Labour Force Survey confirms that there is a downturn, with the first significant decrease in jobs since the Asian Crisis of 1997/98.
Now Labour in the 1990s tried to blame all of that downturn on the then National Government. I prefer a more rational analysis, and both National in 1997 and Labour in 2008 can’t be primarily blamed for what is essentially a global problem. However both Governments do have responsibility to have the economy as free and resilient as possible to mitigate the effects of global events.
So what has happened in the last quarter:
- Those in employment have dropped on a seasonally adjusted basis by 29,000, wiping out the gains since December 2006
- The number of people unemployed rose by 4,000 – a 5.2% increase from 77,000 to 81,000
- The number of people not in the labour force increased by 35,000 – so these are people no longer looking or available for jobs. The labour force participation rate has dropped to 67.7% – at least a two year low.
- Most of the fall in employment has been amongst under 25s
- Unemployment rates (non seasonally adjusted) by ethnicity are Europeans up from 2.2% to 3.0%, Maori from 7.2% to 8.6%, and Pacific from 4.8% to 8.2%
- Wellington appears to have the largest rise in unemployment – from 2.5% to 5.0%
- The total number of jobless people (this includes those not available or looking for work) rose from 145,900 to 181,800
- The number of actual hours worked in the quarter is the lowest since March 2005
Now I think the HLFS has exaggerated the decline somewhat. The HLFS is basically just a big opinion poll. It has a large sample (17,000 off memory) but that still leaves a sampling margin of error. I don’t think there has actually been 29,000 jobs go in the last quarter. But certainly there has been some decline.
The above graph, at The Visible Hand in Economics, shows the market reaction. The concern is not over the decline, as much as the size of the decline.
The only good news is that the chance of a lowering of interest rates this year is now higher. But food and fuel inflation will still make this a risky call to make too early.
Tags: Exchange Rates, HLFS, Interest Rates, unemployment
May 8th, 2008 at 2:26 pm
Yes, and all we can expect from the Government is “this indicates weaker wage growth in the future, so fuck off, Deborah Powell, nyah nyah nyah…”
The Reserve Bank will wait to see if this was a blip (which it won’t be) and then reduce the OCR in October by which time we’ll be even more in the shit.
Vote:May 8th, 2008 at 2:28 pm
No doubt Labour will claim that whilst they single handedly created the lowest unemployment they now have no control over it, just like international commodity prices. Willing to take credit where it’s not due and blame someone else when it’s not working the way they want. Also, don’t expect interest rates to drop anytime soon. Even if the OCR drops, the banks will start taking profit to cope with all the people who can’t afford to service their mortgages.
Vote:May 8th, 2008 at 2:30 pm
30,000 individuals actually. Had to look it up but I didn’t think 17,000 was right because it has to be a divisible number to allow for rotating stock. We’ve blogged on this simultaneously. What I also noticed was the large jump in unemployment rate for one parent with dependent children only households. The gain there has also been wiped out.
Vote:May 8th, 2008 at 2:34 pm
Decrease in employment for under 25′s got anything to do with the abolition of youth rates then?
Vote:May 8th, 2008 at 2:35 pm
And get this. “Labour Force Survey reflects stability (in the face of economic challenges)”. That’s Ruth Dyson’s headline spin. I don’t know how she has the gall. Then again, after the singing episode, nothing should surprise me.
Vote:May 8th, 2008 at 2:40 pm
I look forward to Labour taking full blame for this, I look froward to endless Labour MP’s standing in the house and telling NZ that it is the policies of this Labour govt and Dr Cullen in particular that is the reason we have seen such an alarming increase in the unemployed.
The Bastards have been taking credit for the good times (when the reality is that we did well in spite of Labour not because of Labour) then they can take the flack in the bad times.
Vote:May 8th, 2008 at 2:40 pm
Yes almost needs an Orwell prize for that press release.
Vote:May 8th, 2008 at 2:42 pm
And don’t forget to add back all those who have departed to Australia, the numbers would have been far worse:-)
Vote:May 8th, 2008 at 2:50 pm
The failed socialist experiment of the turn of the millienium. Say it enough and people will start to accept it.
Vote:May 8th, 2008 at 2:59 pm
Right of Way is Way of Right: Decrease in employment for under 25’s got anything to do with the abolition of youth rates then?
No, it is a direct result of the mother of all budgets and National’s failed policies in the nineties.
Or so some will have you believe.
Vote:May 8th, 2008 at 3:02 pm
The big difference between the last recession in 98 and this one
Vote:Is that in 98 the Reserve bank didn’t react fast enough to the Asian crisis which led to the downturn but was counterbalanced by growth in the following years.
This time the governments policies that have led to low productivity and hence have put us on a lower growth path over the past 4 years and also has been combined with an inflation at or above the Reserve bank’s target range. So their is no scope to cut interest rates until we go into a full blown recession, and which will not be balanced in future years without a major change of direction.
May 8th, 2008 at 3:02 pm
That graph is laughable DPF. So obviously intended to deceive. Jeez you’re a card aren’t you?
[DPF: What are you on about. It is a graph of how the dollar has moved against the TWI today. I took it from an economist blog who took it from the National Bank who generate it automatically. I don't even know how your over-active imagination thinks this is deceiving anyone, but frankly I don't care. I would suggest your existence here is threatened if you keep alleging I am deceiving people when all I do is post a graph from a bank's website]
Vote:May 8th, 2008 at 3:05 pm
“Now Labour in the 1990s tried to blame all of that downturn on the then National Government. I prefer a more rational analysis, and both National in 1997 and Labour in 2008 can’t be primarily blamed for what is essentially a global problem.”
The difference is that unemployment never stayed below 6% for more than a year in the 1990s, whereas Labour, thanks to its active labour market policies, have been able to consistently hold it below 4%
Vote:May 8th, 2008 at 3:21 pm
Crap Nome. As usual.
Vote:May 8th, 2008 at 3:28 pm
Well most of them should be able to get employment on the Railways though on the other hand the thousands that will be necessary to manage the Liabour’s Emissions Trading Rort may have to wait a couple of years.
Vote:May 8th, 2008 at 3:30 pm
hey roger, i hope you appreciate how lucky you are at kiwiblog..
i got into a debate with some irish guy at the standard and was banned for a week! all because i won.. and he’s the one that abused me haha
labour have presided over the best economic times in history. we have profited in spite of labour.. not because of..
course, they take all the credit for the bad times.. then blame the globe for the bad times.. seems about right for them!
Vote:May 8th, 2008 at 3:35 pm
Sheesh dime – and you seemed to be Soooooooo enjoying your time at The Average yesterday! They could take some lessons from DPF – he’s called roger nome for lies and slurs at least three times today, but the nome keeps on coming back for more!
Vote:May 8th, 2008 at 3:41 pm
the funny thing is.. we were discussing a 90 day trial period for employers.. i, obviously agree with it.. irish dude didnt..
irish guy thinks employers would abuse it..
then he bans me without warning (their policy says ya get warned before being banned)
so maybe he disagrees with the 90 day trial period, cause he thinks everyone will act like him when they get a bit of power
anyway i better stop thread jacking before dave bans me here
Vote:May 8th, 2008 at 3:49 pm
yes dime, well irish boof and all those other losers don’t need to worry about the economic downturn, because they’re in the pocket of the Labour Party, and everyone knows how good they are at taking from the Consolidated Fund for their pet projects…
Vote:May 8th, 2008 at 3:55 pm
Now we must be consistent In 1997/98 The Socialists blamed the Nats so it appropriate to blame the Socialists
And the big laugh is as the Socialists supporters are economic and financial pygmies they will believe its the governments fault.,
And thats why the next round of polls will have the Socialists struggling to top the 30 point mark
Helen is looking like Hillary more and more Both names begin with H and both are losers who havent yet figured out what went wrong.
LOL
Vote:May 8th, 2008 at 4:29 pm
>>The difference is that unemployment never stayed below 6% for more than a year in the 1990s, whereas Labour, thanks to its active labour market policies, have been able to consistently hold it below 4%
National brought Unemployment down from 11% to below 6% between about 91 and 96.
Vote:Yes there was a blip in 97 and 98 for reasons I stated above amongst other. It was back below 6% by the time Labour took over
Labour has only achieved a 2-2.5% fall between then and 04
I don’t claim to be able to see into the future but with the productivity growth we are getting now. I am as sure as hell with Labour in power it won’t be able to stay this low for very long
May 8th, 2008 at 4:46 pm
emmess Simon English said it was a hoax to get unemployment under 4%.
Any way the numbers are volatile aound this time of year. Its those reef fish again
2005 Q4 3.6 > 3.9% 2006 Q1
2004 Q4 3.6 > 3.8
20003 Q4 4.6 > 4.1
2002 Q4 4.9 > 4.8
So a 0.2% change is not unusual especially in the last 2 years ( lin 2005 it was 0.3%) even greater than todays numbers
And National didnt ‘bring down ‘ unemployment from 11% ( gasp) they pushed it up to 11% from about 9% first
Vote:May 8th, 2008 at 6:55 pm
Ghost
I only want unemployment to increase in November, luckily a good portion of the 49 socialist wankers who form the Labour government are going to be out on their ear by the end of November, I will personally run over anybody who gives an ex Labour party MP a job.
One can only hope that the Labour party staff who fund and host the Standard are all looking for jobs as well.
Actually that gives me an idea, who would you like to see John Key fire in his first week as PM?, I would like to see the following given the arse immediately.
1 Cindy Kiro
2 Howard Broad
3 Rob Pope
Feel free to add any other names.
Vote:May 8th, 2008 at 7:28 pm
If its a sampling error expect to see a large increase in employment in the next survey…….for release a few months before the next election.
Lucky old Cullen.
Vote:May 8th, 2008 at 7:40 pm
No use sacking them big bruv they will just go onto the sickness benefit but in all honesty it’s probably the best place for the lot of them. I know they make me fucking sick.
Vote:May 8th, 2008 at 7:43 pm
bruv. You lie. I have a mutual friend wit hone of the standard guys. They aren’t Labour Party staffers.
As to unemployment in the 1990s. Well, from 1994 to 1998 interest rates averaged about 10% while inflation average only about 2%. So it could be argued that Don Brash’s/the Reserve Bank governor’s overly strict view on inflation control limited job growth and economic growth because of the unduly high interest rates businesses had to pay to loan money to start up a new business or expand and existing business.
Now people will say the the Reserve Bank Act provides the Bank with autonomy from the government, but it’s nonsensical to suggest that the governor is immune from government pressure.
In any case, it’s the far-right monetarism (which National and Don Brash followed at the time) which places high priority on low inflation levels, leading to unduly high interest rates.
Now since Bollard took over the governorship of the reserve bank in 2002 interest rates have been lower, averaging out at below 9% and inflation has been slightly higher at an average of about 3% .
I can’t help but think that, had Brash and National been in charge we would have seen lower inflation, higher interest rates, and consequently higher unemployment.
Anyhow, hardly concrete stuff, but interesting anyhow.
Vote:May 8th, 2008 at 11:41 pm
>>In any case, it’s the far-right monetarism (which National and Don Brash followed at the time) which places high priority on low inflation levels, leading to unduly high interest rates.
Far right monetarism – gimme a break
Vote:You sound like Sue Bradford circa 1992
Jeeeez I bet Hitler is proud of the the world today (considering almost every country in the world uses interest rates to control inflation)
And you had the nerve to call me an idiot for calling Labour hard (not far) left for following one of the biggest programs of nationalization since the 70′s
May 9th, 2008 at 1:42 am
nome, who gives a rats arse what you think might have happened “had Brash and National been in charge”? We’re talking about what is happening now after three terms of a Labour administration. Or are you still blaming it all on someone else? How long does your lot actually need before it takes any responsibility? Oh, right, of course your answer is that the graph is obviously wrong…
Vote:May 9th, 2008 at 1:56 am
“who gives a rats arse what you think might have happened “had Brash and National been in charge”? “
Damn right, you cunts never speculate about what would have happened under different circumstances… Cos that’s bang out of order.
Vote:May 9th, 2008 at 4:46 am
Bruce Sheppard has an interesting article over at stuff that refers to the drop in employment.
Recession, How deep? How ugly?
Are the employment figures a sign of a big recession to come? It will be interesting to see how Labour manages to get the Reserve Bank to drop interest rates before October. Even if the interest rates do fall it will be too late to benefit voters before they head to the polls.
Vote:May 9th, 2008 at 6:59 am
Capill, please don’t call roger a cunt.
Cunts are useful things.
Vote:May 9th, 2008 at 7:02 am
Hmmm that article is no longer there, he must be revising figures. Dropping the OCR won’t drop retail mortgage rates in the short term, in fact it will put upward pressure on retail rates as a lower OCR makes it harder for banks to raise funds.
Alces don’t forget your detailed comment on Kiwisaver.
Vote:May 9th, 2008 at 7:55 am
I have a small business and although I’ve been there in the past, I won’t be taking on any employees. The cost has become just too large under this Labour government. The extra week’s annual leave, the increased minimum wage (and it’s flow on effect to higher wages), now Kiwisaver – may not sound like much, but they all have a direct effect on the bottom line.
Vote:If you end up with an employee who doesn’t perform, then you are lumbered with them and for a small business it can easily be its ruin.
The simplistic socialists are going to say: – well your business isn’t good enough then, or: put up your prices accordingly, or: interview employees well, (I can hear them now!) But my business is good. Its profitable and pays my way – its just well, small.
I’m just one, how many others are like me? I know of 3 in my circle that are not replacing staff as they leave, preferring a smaller ship, to the risks on the high seas.
May 9th, 2008 at 10:33 pm
I’ve been highly sceptical of unemployment numbers since contracting to TEC a couple of years back. Seem there are plenty of NZers who are receiving the UEB but they are not classified as unemployed. This situation manifest when UEB beneficiaries applied for training courses specifically tagged for the unemployed… but they were told that they were ‘job seekers’ because that had applied for job in the preceding 6 weeks… and where therefore ineligible for the course. This led to a hastily convened meeting between TEC and MSD to try to get their (spin?) stories straight
Our unemployment figures are deliberately manipulated by a desperate Labour government.
Vote:May 11th, 2008 at 5:20 am
Sorry about the Bruce Sheppard link. The article is still there. Just go to Stuff, then the blog section. Scroll down to Bruce Sheppard’s blog “Blog: Stirring the Pot” in the business section. The article is “Recession, how deep? How ugly?”
Hilarious reading the comments section. The bit where some people (lefties) think benefits are entitlements and not charity had me laughing for ages.
Vote:May 11th, 2008 at 7:23 am
Sheppards article was funny but not out of whack with what could occur.
Vote:May 11th, 2008 at 7:44 am
getsatffed: I’ve commented on the issue of dodgy reporting of unemployment numbers before.
My stepdaughter receives the DPB, and also has a ‘job’ with Westpac as a part-time teller. She has worked TWO DAYS this year. However, WINZ do not count her as receiving a benefit, and therefore do not count her as a beneficiary. Instead they say she is receiving ‘income supplementation’.
Vote:May 11th, 2008 at 8:01 am
How dare you question Auntie Helen and Uncle Michael. Shame on you.
Vote:May 15th, 2008 at 11:46 pm
I feel sorry for the young viz those who have never seen hard times. Our extened family comprises some 30 plus ~ depending on what happened last night ~ and the young ones appear to think cash comes out of a hole in the wall.
Vote:The world economy is fast approaching a drop into a 1929 recession. Wall Street flips around as does the FT in the UK.
There is a saying when Wall Street has a sneeze NZ gets pneumonia.