A nice headline in the Herald about how the dole queue has dropped for the first time in around a year. However I would not read too much into it:
- Firstly the HLFS is the better (and internationally) comparable figure of unemployment as it measures everyone available and looking for work regardless of if they are on the dole.
- Some of the drop is because of the Government’s subsidies for young people. Now it is great this has got them into work, and off the dole, the effect may not be permanent.
- There are seasonal issues, and over summer you gets tens of thousands of tertiary students seeking work
So I still expect unemployment to increase in the HLFS in Sep 2009 and Dec 2009 quarters. But maybe things will get better before late 2010.
But Business NZ chief executive Phil O’Reilly said the figure tallied with other evidence that employment might be picking up much sooner than the September quarter of next year, when current economic forecasts predict unemployment will peak at 7.5 to 8 per cent.
“There’s a good possibility of a permanent trend downwards from early next year,” he said.
That would be good.
Council of Trade Unions secretary Peter Conway agreed that the signs were that unemployment would peak sooner than next September and at less than 8 per cent.
He and Mr O’Reilly noted there had been no large-scale closures in the last few months, although there was a risk that some businesses might be forced under by the strength of the dollar.
Let’s just hope the US economy doesn’t implode, causing a W shaped recession.