NEW ZEALAND – The Jobs Report, January – March 2022

Jobs market booms despite weak business confidence

New Zealand Jobs Index

Chart 1: New Zealand Jobs Index (seasonally adjusted)

Analysis

• The first quarter 2022 has seen a further increase in job vacancies in New Zealand. The New Zealand Jobs Index rose an impressive 6.5% in the last three months. This demonstrates a further strengthening of the jobs market despite signs of fragility in business confidence. It appears that national structural talent shortages are driving that decline in business confidence, something the Government needs to address to promote economic growth.
• The National Index now sits on 153.41 (Base 100 set in June 2018). Whilst historically very high it is not a record level. The record was set last November when the first signs of the bounce back from the pandemic were seen. Unemployment fell from 4.0% (June 2021) to 3.2% (December 2021). Our leading economic indicator suggests unemployment will fall further when the March HLFS report is published later this month.
• Through much of the two years of the pandemic the Flexible Jobs Index has outperformed the Permanent Jobs Index. In the last two years Permanent job opportunities have risen by 56.2% and Flexible by an extraordinary 95.2%. Employers have opted for Flexible employment arrangements so that they can respond to the ever-changing business conditions.
• That gap started to narrow in late 2021 and this trend seems likely to continue as employers attempt to lock in scarce talent. In the last quarter Flexible job opportunities rose 6.3% and Permanent by 6.5%. The improvement in the Permanent market is not at the expense of Flexible work as this too continues to rise.

Job Trends by Industry

Chart 4: Change in sectoral job indices on prior quarter (1)

• All industries in this cohort experienced growth in Q1 2022 except Health Care which slipped a mere 0.2%. Unsurprisingly Health Care is one of the strongest growing sectors over the pandemic rising 44.6% over the last twelve months. There is anecdotal evidence that some employers have simply given up sourcing from the local market and are waiting for borders to open to attract fresh international talent.
• Professional Services, which included IT/Telecommunications, had another very strong quarter rising 10.1% in the first quarter of 2022. Its annual growth even outstrips Health Care, up a staggering 67.1%. Talent Acquisition specialists report acute shortages across all levels and disciplines including law, accounting and engineering.
• The strongest growth in the quarter was seen in Public Sector. It rose 17.7%. In the December quarter Public Sector employment rose by 12,100 to 184,000. The March HLFS report is expected to show further growth in Public Sector employment. The Government is investing heavily in digital transformation and other policy initiatives adding competitive pressures on private sector hiring.
• The first quarter of 2022 saw a 4.2% pick up in the Accommodation and Food Services sector. It remains 9.5% lower than March 2021. When international borders open fully and employers start to take advantage of the $49 million Tourism Kick Start Fund we expect to see job opportunities escalate significantly. Many staff left the sector during the pandemic. It will be interesting to see if they return.

Quarterly job changes by industry (2)

Chart 5: Change in sectoral job indices on prior quarter (2)

• Retail and Wholesale achieved the highest rate of growth in Q4 2022 but the arrival of Omicron and shrinking consumer confidence led to 13.3% decline this quarter. This fall allows for the normal seasonal factor. Rising interest rates are reducing discretionary consumer spending. Retail businesses have suffered considerably during the pandemic so will only return to the employment market when they are confident that conditions have stabilised for at least the medium term.
• Ironically those same interest rate rises may also account for some of the significant rebound in the Financial Services sector. Job opportunities rose a staggering 39.1 in the quarter. Higher interest rates allow greater margins in retail banking providing additional funds for staff and projects. Private Equity backed Fintech start-ups are cashed up and driving demand even higher.
• Mining, Construction and Utilities held steady, up just 1.8%. This aggregation may be disguising two forces at play. Relatively quiet Mining and Utilities sectors may be offsetting an overheated construction sector where demand is sky high and the local talent pool very limited.

Job Trends by Occupation

Quarterly job changes by Occupation – Managers and Professionals

Chart 6:  Change in occupational job indices on prior quarter

• Professional job vacancies represent over 40% of all job postings on employer and recruiter websites. For the first time we can now breakdown Professionals into key segments. The “Business Professionals” occupational group represents a range of traditional professions including accountants, lawyers, marketers and engineers. Job postings rose 10.5% in the quarter, mirroring the impressive growth in Professional Services. Demand hit an all time high in January but retreated slightly in subsequent months.
• The second best performing professional category in the last quarter was Technology Professionals. Demand rose by 6.4% in the three months to March. Demand has exceeded supply through much of the pandemic. As the economy reopens this will only increase the severity of those shortages. Specialist skills in data analytics, digital and social media, are particularly sought after and very hard to find. Traditionally the sourcing of international candidates supplements the local market. This has not been possible during the pandemic. Both permanent salaries and contract rates rose substantially in 2021. This trend will continue.
• Demand for Health, Education and Community Professionals rose 4.2% in the last three months. Job opportunities are a massive 47.1% higher than last March. Demand for Health professionals has been growing consistently throughout the pandemic. Job opportunities in Education and Community are now recovering well after significant decline when Covid 19 first hit.

Quarterly job changes by Occupation – Non-Professional

Chart 7:  Change in occupational job indices on prior quarter

• The massive rise in Clerical and Administration roles is quite remarkable. March 22 set a new record-level of job vacancies reported. Clerical work declined significantly in early 2020 when Covid 19 first arrived on our shores. Staffing was cut back to the essentials. Since then, the market has slowly recovered. This quarter employers have recognised the need to rebuild capacity. With unemployment at very low levels this is proving a challenge.
• Recruiters report acute shortage of talent across most areas of trades, semi-skilled and low skill level occupations. Demand for Labourers, Drivers and Operators rose 10.5% in the last three months. Many of these roles will have been in Transport and Distribution. Short-term staff shortages arising from sick leave due to the Omicron variant will put further pressure on the New Zealand supply chain.
• Employers are becoming increasingly creative in attracting staff. The opening up of our international borders will help. But this is a twin edged sword with a net migration out anticipated.

Job Trends by Region

Quarterly job changes region

Chart 8: Change in regional job indices on prior quarter

• The Wellington region was the most buoyant in early 2022. Job vacancies rose an encouraging 15.1%. This increase in demand will have covered many areas in both the private and public sector.
• The Auckland region represents close to 40% of all job postings in New Zealand. In the last three months demand rose 9.8%. In pure job vacancy volume terms this rise has driven the broader New Zealand employment market. It has also seen the largest growth over the last twelve months, 64.0%. This rise in Auckland is across a broad range of industries and occupations. The growth in Professional Services and IT sectors in the last quarter will have been primarily seen in the Auckland region.
• Other regions were lacklustre by comparison. The Canterbury region has been particularly subdued. Demand rose 5.3% this quarter but it lags the national average over twelve months reporting just a 14.2% rise, well below the national average.

About The Jobs Report

The Jobs Report explores where job opportunities exist in the New Zealand employment market.  To create the report, data is collected from employer, recruiter, and niche job boards across New Zealand. Repeat advertisements on one site or across multiple sites are de-duplicated to avoid double counting. Artificial intelligence is used to code every job advertisement into a wide range of key fields from which detailed analysis is possible.

The charts, data, detailed analysis, and commentary on The Jobs Report are developed by Hro2 Research. Raw data is seasonally adjusted and trended using X-13ARIMA then indexed by Hro2 Research. These services are provided to RCSA under license.

Raw data is provided under license to Hro2 Research Pty Ltd by EMSI Burning Glass

All data in this report is Seasonally Adjusted. Trend analysis has been suspended during Covid 19.