Unemployment rate expected to hit nine-year high
Economists expect the rate to rise to 5.3% at the end of June – the highest since the end of 2016 – and up from 5.1% in the previous quarter, with jobs having been shed and hiring almost at a standstill.
"We expect the unemployment rate to rise... as very modest growth in the labour force - labour supply – meets a small contraction in employment – labour demand," ANZ senior economist Miles Workman said.
Economists have picked that the labour market was close to the bottom, but the lack of meaningful growth in the past quarter has cast doubt whether this might be the case.
Workman suggested a degree of "labour hoarding" had suppressed unemployment as firms opted to hold on to staff in anticipation of an economic upturn.
ADVERTISEMENT
"If a recovery in economic momentum doesn't do the heavy lifting when it comes to 'right-sizing' firms' labour input, a further reduction in headcount may be needed."
ASB senior economist Mark Smith said partial indicators since the last set of numbers had shown falling job advertisements, firms still shedding staff, little problem in finding staff except in specialised positions, and people quitting the workforce.
"Earlier falls in hiring and more competition for jobs is expected to continue to deter some candidates from actively seeking work."
No hiring, some firing
Westpac senior economist Michael Gordon said chief among the casualties of the downturn and job losses have been young people.
"As the economy cooled off, this group has found themselves out of work again or are struggling to get into work in the first place."
The overall slide in immigration from post-Covid gains of more than 130,000 a year to a mere 15,000, and a subsequent exodus to Australia, are likely to be marginal influences for the labour market.
ADVERTISEMENT
However, cooling wage growth may be a more significant factor.
Expectations are that private sector labour costs grew about 2.3% in the June quarter – a four-year low – as the weaker employment market shifted the bargaining advantage to employers from workers.
That would mean wages falling behind rising inflation, but would also reduce wage pressures on domestic prices.
"Wage inflation can be considered broadly consistent with CPI inflation around target, but given we're a decent clip from the labour market entering inflationary territory... it's fair to say that disinflation pressures stemming from the labour market are set to continue for a while yet," Workman said.
Kiwibank economists said conditions were right for another Reserve Bank interest rate cut on August 20.
"Downside risks to medium term inflation are growing given the soft labour market and dimming global outlook.
"We expect the RBNZ to cut the cash rate by 25bps (basis points) at the August meeting. And they'll need to go to 2.5% eventually," they said in a commentary.
ADVERTISEMENT
By Gyles Beckford for rnz.co.nz
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NZ Herald
5 minutes ago
- NZ Herald
Covid wage-subsidy cheat Luke Daniel Rivers cooked up fake employees to steal nearly $1 million
He spent a term at a local grammar school but couldn't afford the fees, so he went to work, then studied and became an accountant. He changed his name by statutory declaration in June 2004, believing an English-sounding name would enhance his career prospects. In July 2006, he got a new Inland Revenue Department (IRD) number under the name of Luke Rivers. However, he did not tell the tax department he still held another tax number under his birth name. Prosecutor Fiona Culliney said the offending Rivers was charged with started in 2011, when he evaded child support by filing multiple tax returns misrepresenting his income. But when the Covid-19 pandemic presented a new opportunity, the scale of his offending escalated. As the Government rolled out wage subsidies and small-business support schemes, Rivers cooked up an elaborate con. He pocketed about $906,000 and attempted to swindle a further $724,105.60. The fantasy world of his fraud scheme included the names of three Indian 'employees' who had never been in New Zealand. He made 28 applications on behalf of eight companies he controlled, with a dozen of those applications fraudulent. Luke Daniel Rivers's fraudulent applications for wage subsidies named three "employees" who had never been to NZ. Photo / Dean Purcell In the small-business cashflow scheme he acquired about $29,000 and made failed applications for a further $41,600. The court heard Rivers was the sole director and shareholder of Your Payroll Limited, Your Refund Limited, Accounting 4 Me Limited and Save On Mortgage Limited. In multiple wage-subsidy applications he named himself as a full-time employee. Rivers was charged in June 2023 and initially denied the allegations. By October that year, it seemed a trial lasting four or five weeks would happen. But in April this year, Rivers admitted 29 charges. Culliney said Rivers' offending was prolonged and involved the abuse of his position as a chartered accountant. 'On that basis, [the chances of] a discount for character, if any's available, must be very slim.' The court heard Rivers cited his Chinese culture and 'expectations on him to be financially successful' as influencing the offending. 'He's well-educated and a successful businessman,' Culliney said. 'This is a particularly sophisticated and deliberate scheme of fraud. It's opportunistic in the sense that the country was in crisis, but it wasn't a situation where it was easy enough to dip into client funds.' In November 2020, Rivers opened an Oversea-Chinese Banking Corporation (OCBC) account in Singapore and sent $100,000 to it. In June 2021, he opened an account with Standard Chartered bank under a Chinese name. In total, $696,243.50 was sent to that account. In December 2020, he sent $250,000 to the OCBC account on the same day he received that money from the Government. Defence counsel Baden Meyer said Rivers was not a demonstrative man, but he was remorseful. The defendant had already repaid $1 million. 'The payment of reparation …. is a practical demonstration of his remorse," Meyer said. Chartered accountant Luke Daniel Rivers used his skills to cheat the wage subsidy scheme. Photo / Dean Purcell The prosecution said seven years' jail should be the starting point, and the defence said six years. Judge Kathryn Maxwell said the amount of money in the fraud was an aggravating factor. She said Rivers' use of two IRD numbers allowed him to misrepresent his income for seven years. He forged documents to get three IRD numbers for the Indian people and also made false employment returns. Rivers used real people's names and details to give the wage-subsidy applications a veneer of legitimacy. Rivers abused subsidies which were established to support businesses in need at a time of high stress, Judge Maxwell said. 'It is, more broadly, fraud against taxpayers as a whole.' Rivers received a 10% discount for the reparations he made and a 5% discount for his guilty pleas. He was sentenced to five years and 11 months' imprisonment. Judge Maxwell told him: 'You did not take what you needed. There was a smorgasbord of dishonesty and considerable personal gain.'
NZ Herald
2 hours ago
- NZ Herald
Call for Government to help Auckland as unemployment rises
There was a real case for serious policy or fiscal stimulus around New Zealand, and particularly in the big cities, in order to 'get things going'. 'I think we need to raise the animal spirits, if you like, of the business community.' Bridges said a boost in confidence in Auckland was needed at both business and consumer levels. Things were tough in the city which hadn't caught a break since before the Covid-19 pandemic started, he said. 'There is more stimulus, there is more policy work that government could be doing to provide a better business environment in Auckland in the here and now,' he said. 'I think [the Government has] done some worthy long-term things, but in the end, if all we worry about is the long term, I'm not sure there'll be that many Kiwis left in Auckland. 'It's now that they need to be focused on.' Employers and Manufacturers Association (EMA) head of advocacy Alan McDonald said while the agriculture industry was bolstering employment elsewhere, Auckland had different economic drivers. 'Numbers from the Auckland Council Economic Unit indicated unemployment would be quite high [in the June quarter] and it has been for some time. 'There are some signs of recovery but they're being led by the regional economy and primary sector and Auckland is more about manufacturing and services. 'Hospitality, tourism, education sectors have all been down as well.' McDonald said EMA had received a spike in calls to its advice line about redundancies and restructures since March. 'We had hoped 5.1 [in December 2024] might be the bottom of Auckland's unemployment numbers, but we've been hearing from March until now that things are still very tight and very tough.' But things were starting to turn, he said. The Stats NZ quarterly labour market figures released on Wednesday also showed unemployment was more than double the national rate at 12.1%. -RNZ
NZ Herald
4 hours ago
- NZ Herald
Rupa's Cafe in Freemans Bay gets ticking off from Auckland Council for trading without licence
However, officials from Auckland Council launched an investigation this week after it emerged the cafe had reopened and begun trading without a valid food licence. On Friday last week, a Herald worker spotted an 'Open' sign outside the cafe and freshly baked food in the cabinet, with at least six customers in the shop. Fresh food was displayed in a cabinet when a Herald worker visited Rupa's Cafe on Friday. An open sign was displayed outside the cafe's door on Friday last week. A council food inspector was dispatched to the business on Tuesday but it appeared to be shut. 'Since the food registration for Rupa's Cafe at 103 Wellington St, Freemans Bay was cancelled in June 2025, the council has received no subsequent application for a new food registration for a cafe or other food business at that address,' the council's team leader for Environmental Health Response, Alan Ahmu, said. 'We were unaware of the alleged reopening of a cafe at the address.' Following Tuesday's visit, the council said an inspector would make another visit in the next two days. Rupa's Cafe owner, Dilip Rupa. Photo / Dean Purcell In a statement yesterday afternoon, Ahmu said a food safety officer had now made contact with the cafe. The operator 'now has an awareness of the registration requirement, has ceased trading and advises they will not trade again unless they are registered', Ahmu told the Herald. Selling food without a licence can still carry penalties, the council confirmed. The maximum penalty upon conviction for an individual is a fine not exceeding $50,000, and for a body corporate is a fine not exceeding $200,000. The cafe appears to be closed today, with calls to business going unanswered this morning. Cafe and owner have colourful backstory Rupa, a controversial figure in Auckland's hospitality scene, has had run-ins with Auckland Council and WorkSafe over unpaid property taxes and compliance violations. Rupa was the first person to be prosecuted by WorkSafe for failing to display Covid-19 QR codes during the pandemic. 'My main objection to the QR code is no one knows what the coding is … there's no security and there's no knowledge of where this QR coding is going," Rupa told the Herald at the time. He was ultimately fined $1500 after a 2022 trial was held in his absence, with Judge Stephen Bonnar, KC, ruling Rupa 'held strong views' about the legality of the provisions and made an intentional choice not to comply. Rupa's Cafe started out as a general store, 72 years ago. Photo / Michael Craig The Rupa family also defied paying the rates on their Freemans Bay cafe and two Grey Lynn private homes over several years in a bitter stand-off with the council. With the combined unpaid rates bill on their properties growing to $350,000 by 2021, the council began court proceedings to try to recoup the missed payments. In September last year, the Herald revealed the outstanding rates and associated penalties had ballooned to a record $876,623.65 - $662,179.06 for the cafe and $214,444.59 for the family home – leading the council to pursue a forced sale of the Rupa family's properties. The council struck a last-minute deal with the Rupa family over the bill in April, although the details of it remain protected under confidentiality obligations. Opened 72 years ago by Rupa's parents as a general store, Rupa's Cafe built a loyal base of customers over the years as a Freemans Bay institution. The neighbourhood cafe was known for its coffee and chai, serving up a mix of Indian dishes – including what Cuisine's Ginny Grant called 'some of the best samosas in Auckland'.
