Jobs Market Declines Further

Executive summary

  • 2024 has started off where we ended in 2023 with a further substantial decline in online job postings. The New Zealand Jobs Index fell 17.0% in the last three months.

  • The only good news is that this quarter’s fall is less than the prior quarter (20.7%) but only just!

  • The accumulated decline over twelve months is a staggering 42.3%. The employment market has really been shrinking since the end of Covid.

  • The trends between Permanent and Flexible job opportunities are surprising. In the March quarter Flexible job postings fell 19.8% while Permanent fell 16.4%.

  • Declines in five sectors exceeded 20%. One was Health Care. Net Migration in is starting to ease some of those shortages.

  • Vacancies in Public Administration have fallen for four consecutive quarters. The cumulative decline is a staggering 66.7%. Severe cutbacks in Government hiring and the curtailment of some major projects is having a major impact nationally.

  • Retail and Wholesale were also dragged down by falling consumer sentiment and spending. Job postings shed 11.5% over three months.

  • Mining, Construction and Utilities grew a net 4.4%. The weakness is in Construction where a combination of weak residential housing and cutbacks in major infrastructure projects has seen job opportunities in the sector decline substantially.

  • Business Professionals has some of the largest volumes of online job advertising. It peaked back in November 2021 at the end of Covid lockdowns but has trended down since then.

  • The scale of contraction in non-professional roles is unprecedented. Employers are withdrawing from new employment activity as they wrestle with the uncertainties within New Zealand and more broadly internationally.

  • By way of contrast Canterbury was worst hit, down 25.8%. Job vacancies have halved in a year. Auckland represents around 40% of all job vacancies. It is struggling too, down 21.0% in just three months.

  • Job vacancies are a “lead indicator” for employment. It seems inevitable that unemployment will rise in the months ahead.

New Zealand Jobs Index

Chart 1: New Zealand Jobs Index (seasonally adjusted)

Analysis

  • 2024 has started off where we ended in 2023 with a further substantial decline in online job postings. The New Zealand Jobs Index fell 17.0% in the last three months. Falls of this magnitude are rare in any employment market. New Zealand has managed three double digit declines in four quarters!
  • The accumulated decline over twelve months is a staggering 42.3%. The employment market has really been shrinking since the end of Covid. Recent political upheaval has taken a business community, already rattled by high inflation and rising interest rates, into an even more precarious position. In economic speak this is undoubtedly a “hard landing”.
  • This has however, not translated to a massive rise in unemployment. At least not yet. The latest quarterly data (December 2023) saw unemployment rise to 4.0%, up 0.6% over the calendar year but still well below rates of unemployment of over 5% and 6% seen in the past. This is because the market has fallen from an extraordinary high level immediately following the end of Covid restrictions. Employment rose in January and February because net migration is some of the highest on record (Stats NZ March 2024).
  • The trends between Permanent and Flexible job opportunities are surprising. In the March quarter Flexible job postings fell 19.8% while Permanent fell 16.4%. The gap is wider year-on-year – the Permanent Jobs Index is down 39.9% and the Flexible Jobs Index down a massive 51.4% – a halving in twelve months!
  • Traditionally, in a weak employment market, employers shift towards Flexible job offers in case business conditions deteriorate further. Not this time! If employers are hiring, they are still favouring permanent employment. The reason? Recent experience with acute skills shortages means employers still want to lock in scarce talent.

Job Trends by Industry

Chart 3: Quarterly change in NZ Jobs Index by Industry (1)

  • All four sectors fell in Q1 2024. Declines in four of five sectors exceeded 20%. Even Health Care. While talent shortages certainly remain employment in the sector rose by nearly 5% in the twelve months to January 2024 (NZ Stats Employment Indicators Feb 24). Net Migration in is starting to ease some of those shortages.
  • Vacancies in Public Administration have fallen for four consecutive quarters. The cumulative decline is a staggering 66.7%. The 21.9% decline in Q4 was an improvement on the prior quarter. Severe cut backs in Government hiring and the curtailment of some major projects is having a major impact nationally, with Wellington particularly hard hit.
  • Only Education and Training performed relatively well – down “just” 5.9%. Improving international student numbers and the creation of training places in the trades to alleviate skills shortage will help the sector stabilise in 2024. It remains very weak by historical standards.
  • High inflation and rising interest rates are hurting discretionary spending. This flows directly through to sectors such as Accommodation and Food Services. Demand remains very volatile. A 22.7% decline in the last quarter suggests a tough year ahead for job seekers in a sector characterised by many small businesses and casual employment arrangements.
Quarterly job changes by industry (2)

Chart 4: Quarterly change in NZ Jobs Index by Industry (2)

  • The results were more mixed in this cohort of industries. Manufacturing joined the group of particularly weak sectors, contracting 22.8% this quarter.
  • Retail and Wholesale were also dragged down by falling consumer sentiment and spending. Job postings shed 11.5% over three months. Interestingly Retail and Wholesale is the only industry to have an Index above 100 (124.27). This means that the level of demand for staff in all other sectors is lower than back in June 2018 when the Index was set.
  • There were however a couple of positive signs. Finance and Insurance grew 5.2%, a small pick up after a disastrous 2023.
  • Mining, Construction and Utilities grew a net 4.2%. Breaking this down, there was a really strong rebound in Mining and some positivity in Utilities. The weakness is in Construction where a combination of weak residential housing and cutbacks in major infrastructure projects has seen job opportunities in the sector decline substantially.

Job Trends by Occupation

Quarterly job changes by Occupation – Managers and Professionals

Chart 5: Quarterly change in NZ Jobs Index by occupation

  • Q1 saw a falls in all professional occupational groups with the notable exception of Technology Professionals. It grew by a mere 4.4%. After a shocking 2023. This does suggest a leveling off. The annual decline is still 60.5%. There is a long road ahead before those in the Technology space can expect job prospects to improve. Recruiters still report some shortages, but advertising response and competition for work is greater than it’s been for some time.
  • It seems hard to believe that demand for Health, Education and Community Professionals could fall 20.1% in a quarter. This follows years of acute shortages. Health Care saw the greatest growth in employment in 2023 (5.3% per Stats NZ March 2024) but employers are now feeling the pinch. Migration is helping to alleviate some of the more acute shortages in occupations such as Nursing, Aged Care and Childcare.
  • Business Professionals has some of the largest volumes of online job advertising. These have been shrinking for some time. It peaked back in November 2021 at the end of Covid lockdowns but trended down since then. Difficulties in finding new roles in a weak economy may see a return to some of the “brain drain” to Australian and Europe as experienced pre Covid.
Quarterly job changes by Occupation – Non-Professional

Chart 6: Quarterly change in NZ Jobs Index by Occupation

  • The scale of contraction in non-professional roles is unprecedented. Employers are withdrawing from new employment activity as they wrestle with the uncertainties within New Zealand and more broadly internationally. Job vacancies are a “lead indicator” for employment. It seems inevitable that unemployment will rise in the months ahead.
  • Many of the roles in this cohort are low skilled and relatively poorly paid. The focus for employees over the next twelve months must be job security. This is also likely to feature highly in priorities for job seekers. Wage growth reached just shy of 4% last year. This will slow in 2024.

Job Trends by Region

Quarterly job changes by region

Chart 7: Quarterly change in NZ Jobs Index by Region

  • All regions experienced significant decline in the first quarter of 2024. Wellington’s 8.5% might have been better than expected! Many of the Government cutbacks were felt most in Wellington. Q4 2023 was particularly vicious with job postings plummeting. At least we saw some levelling off occurring this quarter.
  • By way of contrast Canterbury was worst hit, down 25.8%. Job vacancies have halved in a year. Auckland represents around 40% of all job vacancies. It is struggling too, down 21.0% in just three months.
  • Smaller regional Councils saw relatively stable employment markets in 2023, primarily through rebuilding post Cyclone Gabrielle. But the impact is reducing, and they too are now getting caught up in the malaise facing New Zealand businesses.
  • In summary, the New Zealand jobs market is in very poor shape. There is likely to be more bad news on the unemployment front in the months ahead. No sectors, nor occupations, are immune from this downturn. Business confidence, and therefore hiring, will remain low and may possibly fall further until employers see reduced uncertainty, reduced interest rates and some return of consumer confidence.

About The Jobs Report

The New Zealand Jobs Index is a measure of where job postings exist in the New Zealand employment market. 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 and Jobs Index 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 Lightcast. All data in this report is Seasonally Adjusted.