Has the labour market bounced? Rise in job adverts points to more inflation pressure

The hospitality and tourism sectors are still struggling to fill positions in the lead-up to the holiday season. Photo / Getty Images

The number of jobs being advertised has risen for the second month in a row, according to the latest SEEK Employment Dashboard.

The SEEK data shows the number of jobs advertised nationwide in February was up one per cent. That follows a rise of 2.2 per cent in January

It’s a trend that may throw a spanner in the works of the Reserve Bank’s inflation-busting plans for the New Zealand economy.

The average number of applications per job also declined, the report showed.

The numbers indicated a possible bounce-back for the already tight labour market after job ads declined through last year.

On an annual basis, job adverts are still down 13 per cent on February 2022.

BNZ senior economist Craig Ebert said the data gave more credence to the idea that resistance was building in the labour market.

He noted it was only a slight gain but “nonetheless, it was enough to be bending the trend,” he said.

“It’s still hard to conclude too much from February’s result, in light of the recently disastrous weather that hit New Zealand’s North Island,“ he said. “With this in mind, it was interesting that Auckland’s job ads, after bouncing 3.3 per cent in January, were roughly steady in February, following the severe flooding that hit the region late-January.”

The rebounds had come through the likes of Banking & Financial Services, Education & Training, Government & Defence, Hospitality & Tourism, Insurance & Superannuation and even Real Estate & Property, he said.

Construction also rebounded strongly, up 11 per cent in the past month despite still being down 15 per cent at this time last year.

Ebert noted that the pattern of moderate recovery looked very similar across Full Time, Part Time, and Casual/Vacation positions.

A bounce-back in employment would see New Zealand following a similar trend to the US where strong job numbers have rattled markets and prompted a reassessment of how high-interest rates will have to rise (and for how long) to get inflation under control.

Last night US Federal Reserve chair Jerome Powell warned markets that the US economy was not slowing as anticipated in response to rate hikes.

ANZ this week published a commentary on a similar theme, pointing out that while inflation may have peaked there was now a serious risk that it would take longer than forecast to return to the Reserve Bank’s target band of 1-3 per cent.

ANZ economist Finn Robinson noted, that while pandemic effects had faded allowing prices for goods to ease, strength in the services end of the economy was staying stubbornly high.