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Hiring expectations up for second consecutive quar

Hiring expectations up for second consecutive quarter, according to latest Hudson Report
One in five employers expect to increase permanent staff levels
Increasing demand for contract/temporary employees
Lower North Island the most optimistic across regions, although Upper North Island reports the strongest increase in confidence


October 28, 2009 – Hiring expectations among New Zealand employers continue to rise as businesses turn their attention to planning for future growth, according to the latest Hudson Report. Employer sentiment has now built on the turnaround in the September quarter with a net effect[1] of 10.7 per cent of employers now intending to increase permanent staff levels during the next three months.

The Hudson Report: Hiring Expectations shows the improvement from last quarter has gained momentum with the shift towards increasing headcount moving up 6 percentage points to 21.9 per cent this quarter. Employers intending to reduce their permanent staff levels continued to decrease from 15.3 per cent to 11.2 per cent for the quarter. Meanwhile the proportion of employers intending to maintain current staff levels remained steady at 66.9 per cent from 68.8 per cent.

“The June quarter of 2009 was the first quarter of positive growth since the end of 2007 so there is a sense that the worst of the downturn is now behind us. Slowly but surely businesses are starting to see signs that they are edging out of the downturn. Having carefully managed their businesses through the recession, employers are now starting to shape their organisation for future growth, but they will be taking these steps gradually,” said Marc Burrage, executive general manager at Hudson.

“While managing costs still remains a top priority, employers are developing new business strategies to take full advantage of market opportunities and ensure they have the right mix of skills to deliver future success. With many organisations operating at full capacity, some employers are considering taking on additional staff, in order to manage the workload and reduce stress on existing staff. This is borne out by the increasing number of employers intending to take on contractors or temporary staff,” added Burrage.

Economic and labour market conditions
The New Zealand unemployment rate rose to a six-year high of 6.0 per cent in the June quarter, rising from 4.0 per cent 12 months ago when world markets collapsed. There are now 138,000 people who are unemployed nationally.

The economy is showing signs of pick up after five consecutive quarters of negative growth, however growth in GDP was just out of negative at 0.1 per cent for the June quarter and economists expect the recovery will be gradual and slow. The improvement in global financial market conditions has prompted the Reserve Bank of New Zealand to withdraw several temporary crisis measures put in place last year to help ensure liquidity. While there are increasing reports of rising business and consumer confidence, Finance Minister, Bill English recently stated that the effects of the recession and global credit crunch will be felt for some time and the “road to recovery will be pretty rocky”.

Other key findings

By industry. The upturn in sentiment recorded nationally tends to be across most industries. Sentiment in the IT industry remains stronger compared to other industries, with a net 25 per cent of employers intending to increase permanent staff. Professional services also moved into positive territory with a strong rise of 22.6 percentage points to a net 17.2 per cent.

Sentiment in the manufacturing industry rose 11.8 percentage points and edged into positive, at 0.6 per cent, after being negative all year; retail sentiment rose a further 22.2 percentage points to net 15.2 per cent. The construction/property/engineering industry also rose out of negative sentiment up 32.8 percentage points to 15.4 per cent after the long-anticipated commencement of public infrastructure projects; while government sector hiring intentions reported a net 8.3 per cent of employers planning to increase permanent headcount, after a rise of 7.8 percentage points.

By region. All regions recorded an increase for the second consecutive quarter. Employers in Lower North Island remain the most optimistic with a net 22.2 per cent planning to increase permanent headcount. Sentiment among Upper North Island employers increased the most (up 17.3 percentage points) moving out of negative to a net 14 per cent of employers intending to increase permanent staff levels in the next three months. South Island employers have consolidated last quarter’s increase in sentiment, with a moderate 3.1 percentage point rise to 5.35 per cent.

By size[2]. Large companies reported the largest increase in sentiment, shifting from being far less optimistic than small and medium-sized businesses, now large companies report similar intentions to increasing permanent staff numbers, with a rise of 12.7 percentage points and a net positive score of 10.4 per cent. Medium-sized business confidence rose again with a net 11 per cent of employees intending to hire, up 8 percentage points. Small businesses remained steady with a net 10.7 per cent planning to increase staff levels over the coming three months, up 1.7 percentage points from last quarter

Contracting/temporary overview
All regions nationally have seen an increase in contracting/temporary hiring intentions this quarter. For the first time since December 2008 employers’ expectations have returned to positive territory with 5.7 per cent intending to hire temporary staff up 10.5 percentage points this quarter after a rise of 9.4 percentage points last quarter.

By industry
Although most industries that reported a negative score in the last quarter have now returned to positive territory, there is a wide variation in the level of confidence among different industries.

A net 25.0 per cent of employers in the IT industry intend to increase permanent staff levels over the coming three months. Employers continue to report amongst the highest hiring intentions in comparison to other industries nationally, as the skills shortage continues. In addition, government organisations are investing in large Enterprise Resource Planning systems such as SAP, generating increased demand for IT services for vendors.

Employers in the construction/property/engineering industry have reported an increase in confidence for the first time since early 2008, returning sentiment to positive having been negative for the past two quarters. Up 32.8 percentage points, a net 15.4 per cent of employers indicated an intention to increase their permanent staff levels over the coming three months. This is mainly being driven by the long-anticipated commencement of central Government public infrastructure projects such as motorways, schools and housing.

Hiring intentions in the government sector remain conservative with a net 8.3 per cent of employees planning to increase permanent headcount during the coming quarter, up 7.8 percentage points from last quarter. Total spending by central Government is up only 0.4 per cent on a year ago, the smallest increase since December 1999[3]. In this context, there is likely to be another 12 months of restructuring as the Government continues to drive efficiencies.

In the manufacturing sector, a recovery in global manufacturing has seen employer sentiment record a positive result for the first time all year, with a net 0.6 per cent of employers reporting an intention to increase permanent headcount over the coming three months. Up 11.8 percentage points from last quarter, the net effect is nevertheless very close to zero and one of the lowest levels of sentiment across all industries nationally.

Employer confidence in the professional services sector continues to improve, building on last quarter’s turnaround with a strong rise of 22.6 percentage points. After remaining negative for the past two quarters, sentiment is now back in positive with a net 17.2 per cent of employers reporting an intention to increase their permanent staff levels over the coming three months.

Sentiment remains relatively strong in the telecommunications sector, with employers reporting a slight easing in confidence (down 0.7 percentage points) after a large jump last quarter, with a net 11.0 per cent of employers intending to increase their permanent staff levels over the next three months.

The retail sector has reported a considerable 22.2 percentage point increase in employer sentiment, returning sentiment to positive, having been negative all year. A net 15.2 per cent of employers are now intending to increase their permanent staff levels over the coming three months.
Employers in the FMCG sector have reported a modest increase in sentiment for the second consecutive quarter. Up 3.9 percentage points, a net 3.9 per cent of employers are planning to increase permanent staff over the coming three months, with the vast majority holding steady on headcount. An 8.7 percentage point increase in confidence in the advertising/media/marketing sector has taken employer sentiment to zero after it recorded negative results for the previous two quarters.

A net 2.1 per cent of employers in the transport industry reported an intention to increase permanent staff levels over the coming three months, up 6.8 percentage points from last quarter.

By region
Upper North Island:
Employer sentiment in the Upper North Island has risen another 17.3 percentage points, into positive territory with a net 14 per cent of employers planning to increase headcount during the coming three months.

In the contracting/temporary market, hiring intentions have increased for the second consecutive quarter, up 8.4 percentage points from last quarter, with a net 4.3 per cent of employers now intending to increase the size of their contracting/temporary workforces.

The IT sector is the only industry to report a drop in confidence this quarter, falling 13.2 percentage points and into negative territory with a net score of 3.3 per cent of employers planning to reduce permanent staff levels. Manufacturing industry reports an easing in negative sentiment, although confidence has risen by 8.1 percentage points, it remains negative with a net 4.8 per cent of employers intending to reduce staff levels in the next quarter.

All other sectors in the region reported positive net scores with the largest improvement in sentiment in the Upper North Island was reported in the construction/property/engineering industry, rising for the first time since early 2008 with an increase of 36.6 percentage points to 15.6 per cent.

Professional services returned to positive for the first time in 2009, with a strong 13.5 percentage point rise to 7.1 per cent of employers reporting an intention to hire permanent staff in the next quarter. Employers in the financial services/insurance industry continue to report improving sentiment with a net 10.1 per cent focussing on longer term growth and planning to hire permanent staff. The result is up 7.9 percentage points from last quarter.

The retail sector reports a considerable 21.5 percentage point increase in employer sentiment, moving into positive territory with a net 5.6 per cent intending to increase staff levels in the next three months and the vast majority intending to hold staff numbers steady. Employer sentiment in the FMCG sector improved from a zero per cent net score last quarter, up 4.4 percentage points.

Lower North Island:
Employer sentiment in the Lower North Island has grown 16.6 percentage points this quarter, moving further into positive sentiment. A net 22.2 per cent of employers are expecting to increase permanent staff levels over the coming three months, the strongest level of sentiment across the regions.

In the contracting/temporary market, hiring intentions have increased by a significant 23.6 percentage points from last quarter, with a net 15.7 per cent of employers now intending to increase the size of their contracting/temporary workforces. This is the highest increase and most positive expectation in the country.

Hiring expectations in the government sector continue to stabilise following the severe period of uncertainty in the first half of 2009. While sentiment remains historically low for the sector it has risen by 9.8 percentage points since last quarter, sitting at net 11.5 per cent of employers expecting to hire more permanent staff in the coming three months.

While the public sector remains constrained, private sector employers appear to have completed the majority of their cost cutting, with a renewed focus on winning business and positioning for future growth. The professional services sector reported a considerable increase in sentiment of 35.0 percentage points this quarter, with a net 25.0 per cent intending to increase staff numbers, demonstrating that demand is returning for business consultants, lawyers, chartered accountants and recruitment services.

Employer sentiment in the IT industry has built on last quarter’s small rise with a strong 16.9 percentage increase in confidence, with a net 33.9 per cent of employers now planning to increase their permanent staff over the coming three months. The financial services/insurance industry has reported a continuing improvement in sentiment with a 12.1 percentage point rise this quarter, to a net 17.0 per cent of employers intending to hire in the next quarter.

A net 11.4 per cent of telecommunications employers reported an intention to increase permanent staff levels over the coming three months, a slight easing of confidence on last quarter, down 1.7 percentage points.

South Island:
South Island employers have consolidated the improvement in sentiment reported last quarter moving up slightly by 3.1 percentage points to a net 5.3 per cent of employers intending to hire permanent staff in the next quarter. This follows a surge in confidence last quarter to take the region into positive territory; nevertheless sentiment remains the lowest nationally.

In the contracting/temporary market, hiring intentions continue to stabilise with a net 3.7 per cent of employers intending to increase the size of their contracting/temporary workforces, up 3.7 per cent from zero in the last quarter.

Employers in the manufacturing sector are reporting an improvement in sentiment for the second consecutive quarter and confidence has moved into positive territory with a 15.7 percentage point increase from last quarter. A net 10.4 per cent per cent of employers are now expecting to increase their permanent staff levels.

After a prolonged period of negative sentiment in the property and construction industry, employers reported a 38.1 percentage point rise in sentiment this quarter with a net 21.4 per cent expecting to increase permanent headcount over the coming three months

Employer sentiment in the accounting and financial services sector is now positive for the first time since early 2008, having almost stopped hiring for at least a year, a net 40 per cent of employers report an intention to increase permanent staff levels, up 20.9 percentage points from last quarter.

The IT industry remains resilient in the region, reporting a 7.1 percentage point rise in employer sentiment, building on the increase last quarter, with a net 42.1 per cent of employers reporting an intention to increase permanent staff levels.


ENDS

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