Hiring activity slumps in February as recession set to weigh on 2024 outlook

The construction and industrial sectors drove February’s decline in job ads. Photo / 123rf

Hiring activity slumped in February with news of a recession likely to weigh on the outlook of the jobs market, according to new data from Seek.

Seek NZ’s Employment Report for February found job ad volumes declined 3 per cent compared with January.

Notably, job ads are now 15 per cent lower than February 2019 and down 27 per cent compared with February last year, which was coming off a Covid jobs boom.

“After a slight uplift in January, job ads returned to a declining trend in February,” said Seek NZ country manager Rob Clark.

“The recent confirmation that we are in a recession will have an impact on the hiring outlook for many employers.

“For candidates who are already competing heavily for the roles available, this may lead to an even tougher market in the months to come.”

Compounding the tough market conditions was continuing growth in applications per job ad.

Applications per job ad – already at record levels – rose a further 3 per cent from December to January (a lag month in Seek’s data).

“With job ads lower than pre-Covid and applications per job ad significantly higher, the market is incredibly competitive for workers applying for new roles,” Clark said.

February’s decline in job ads was driven by the construction and industrial sectors. Construction job ads fell 12 per cent while manufacturing, transport and logistics were down 9 per cent.

Job ad volumes overall have now fallen in 10 out of the last 13 months.

Meanwhile, hiring activity surged for healthcare and medical roles, jumping 6 per cent in February – and is now 10 per cent up since the start of the year.

Education and training roles increased 3 per cent month-on-month while hospitality and tourism was up 1 per cent.

“History shows us that certain industries are more recession-proof than others, such as healthcare and medical and education and training, so we would expect there to be some areas of resilience in the coming months,” Clark said.

Last week, Stats NZ figures confirmed New Zealand entered recession after gross domestic product (GDP) fell 0.1 per cent for the December 2023 quarter. This followed a 0.3 per cent fall in the September quarter.

The news only confirmed what many businesses and Kiwis would have already been feeling.

A report from recruitment software platform JobAdder last month revealed businesses were exercising more caution when it comes to staff recruitment amid ongoing economic challenges.

JobAdder CEO Martin Herbst said businesses had been “burnt from the urgent hiring spree that followed the pandemic.”

The average number of jobs created per account for New Zealand agencies dropped from 57.59 in Q2 of 2023 to 45.2 in Q4 of 2023.

The report also showed a boom in temp and contract hiring in 2023 versus a substantial drop in permanent placements.

Ian Scott, general manager of talent solutions at Randstad NZ – one of New Zealand’s leading recruitment agencies – said the recruitment market had softened over the past six months.

“Commercial organisations and Government departments alike are finding ways to reduce expenditure to be more financially prudent,” Scott said.

“We are also continuing to see the impact of technology which is eliminating roles and influencing these hiring strategies.

“That said, many potential jobseekers are sitting tight and unwilling to leap into the job market, given the perception of risk.

“This means unplanned turnover is reducing, which could also be why we are seeing fewer vacancies advertised. Companies are neither growing by design nor shrinking unless planned.”

In the latest ASB Quarterly Economic Forecast, chief economist Nick Tuffley said the bank expects employment levels to remain fairly flat.

Population growth means there will be challenges for a growing number of people seeking work, Tuffley added.

Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports.