Job ads fall but outlook optimistic

By BRIAN FALLOW

Job advertisements fell sharply last month, but ANZ Bank, which monitors them, says it is too soon to conclude that the labour market is weakening.

Seasonally adjusted job ad levels fell 10.6 per cent in November, wiping out most of the gains of the past year. Levels are now only 0.6 per cent higher than a year ago, and 12.1 per cent off their peak in July.

In Auckland they fell 8.9 per cent, reversing October's gains.

"However, job ads [in Auckland] are still running at over 16,000 a month, maintaining the high levels recorded for much of the year. Reflecting this, November job ads were up 10.5 per cent on November last year," ANZ chief economist David Drage said.

He cautioned against putting too much weight on the November fall.

"While we seasonally adjust the series, there is inherent volatility in job advertising around this time of year. This is associated with a sharp drop in job advertising traditionally recorded as we move into the Christmas-New Year period."

The overall level of job advertising, and employment intentions recorded in business sentiment surveys, still pointed to a strong labour market, Drage said.

The Department of Labour in its December report on the labour market outlook expects employment growth to decline over the next 18 months.

But the decline would be from the strong 2.7 per cent recorded in the year ended September - equivalent to 50,000 more jobs - to a moderate 1.5 to 2 per cent.

That would roughly match labour force growth, keeping the unemployment rate reasonably steady, the department said.

It forecasts an employment rate of 5.3 per cent in March next year and 5.1 per cent a year later.

That is more optimistic than forecasts by the Bank of New Zealand and Deutsche Bank, but a little less optimistic than those of the National Bank or the Reserve Bank.

The Labour Department said the strength of the labour market had encouraged New Zealanders to enter or re-enter the labour force, pushing the participation rate to a "very high" 66.6 per cent.

The labour supply has also been boosted by high levels of net immigration. In the year ended September there were a record 95,400 permanent arrivals (including returning expatriates), while departures fell to a five-year low of 58,300.

The department expects the net inflow to decline, but at 15,000 in the year to March 2004 it would still be well above the historical average.

It said the level of employment intentions recorded in the National Bank and New Zealand Institute of Economic Research business confidence surveys suggested job growth of 0.7 per cent a quarter in late 2002 and early next year.

"However, they also pointed to robust growth in the June and September 2002 quarters, which did not occur, so the continued strength of these indicators may be overestimating future growth as well," the department said.

"Nevertheless their strength, plus the likelihood of robust economic growth, is suggestive of at least 0.5 per cent job growth per quarter over the next two quarters."