Employment confidence turns negative in September quarter

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The survey result marked the first time households had held a negative view about labour market conditions since March 2021.
Photo: 123rf

A new survey of households shows sentiment about the labour market has turned negative for the fist time in more than two years as people feel increasingly concerned about prospects.

The Westpac McDermott Miller Employment Confidence Index (ECI) fell by 7.4 points in the September quarter to 98.3.

A level below 100 signals more people are pessimistic about the state of the labour market than those who are optimistic.

The survey had a sample size of 1551 people.

It was the lowest reading for the ECI since December 2020 and the first time households had held a negative view about labour market conditions since March 2021.

Westpac senior economist Darren Gibbs said workers were feeling more competition in the job market.

“The lower perception of job availability likely reflects both the recent decline in new vacancies and increased competition for those vacancies since the re-opening of the international border,” he said.

“This measure often provides a lead on the direction of the unemployment rate. The latest reading suggests that unemployment will rise further over the remainder of this year.”

It followed data from Seek NZ this week showing the number of job applications per ad were at record levels.

https://www.rnz.co.nz/news/business/498768/advertised-salaries-rising-at-fastest-rate-in-six-years-amid-strong-hiring-activity-report

Despite the low reading, Gibbs said only a small net proportion of respondents considered that their job would become less secure over the coming year.

“Historically respondents have tended not to perceive their own jobs to be at risk, even when the unemployment rate has been trending sharply higher,” he said.

However, household confidence about earnings growth also fell slightly, though Gibbs said that measure had remained at low levels since Covid-19, despite a lift in wage growth in the official statistics.

“We suspect that households remain mindful of the rising cost of living,” he said.

“Even those who have managed to secure a large pay rise may feel that they are still struggling to get ahead.”

All age groups surveyed experienced a drop in employment confidence since, but the largest recorded drop was amongst those aged 30 to 49.