NZ: ANZ Job Ads Survey - May 2001

Data Flash (New Zealand)

The number of job advertisements increased by 0.8% in May, following a 4.1% drop in April.

Advertisements in May were 1.2% higher than a year ago. While the combined result of the last two months suggests a slowdown in the labour market, this has to be viewed in the context of the significant increase of employment recorded over the past year.

Today's data is consistent with our forecast of 0.4% qoq employment growth in Q2, which would take the annual rate to 2.8%. That compares to an estimated GDP growth rate of 3.2% over the same period, implying low productivity growth. It is therefore plausible to expect employers to focus on consolidation and productivity gains following a period of strong hiring. Such a trend will be reinforced by a tight labour market that makes it increasingly difficult to find skilled staff. Consistent with that, Deutsche Bank expects employment growth to slow to around 1% over the next year (net 17,000 new jobs).

The weak trend in employment growth going forward is expected to be offset by a rise in wage inflation, as the labour market remains tight with an unemployment rate of around 5.5%. Combined with the positive trend in farming sector earnings, that suggests continued strong household income growth and makes it unlikely that the RBNZ will consider it necessary to further stimulate the economy with continued interest rate cuts.

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