Today’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.