Unemployment statistics for June quarter 2020

The Unemployment statistic for the June quarter 2020 caused some surprise, dropping from 4.2% in the first quarter to 4.0% averaged over April, May and June, but this has been explained with less people unable to look for or start new jobs due to the Covid-19 lockdown.

And the trend is ominously upwards.

The number of people employed fell by 11,000, and 90% of the reduction were women, who work more in the most affected sectors of tourism, hospitality and retail.

With a lot of the recovery targeting construction, dominated by male employees, the outlook for many women looks a bit grim.

Statistics NZ: COVID-19 lockdown has widespread effects on labour market

In the June 2020 quarter:

  • unemployment rate fell to 4.0 percent
  • underutilisation rate rose to 12.0 percent
  • hours worked fell a record 10.3 percent
  • the number of people not in the labour force rose 37,000
  • the number of employed people fell 11,000
  • the wage subsidy scheme was in place from 17 March 2020.

With the country in COVID-19 lockdown when the quarter began, fewer people who did not have a job were actively seeking work. People who were not actively seeking work were not counted as unemployed, resulting in a fall in the unemployment rate. However, many of these people were captured as underutilised.

To be counted as unemployed, a person must have been actively seeking work in the last four weeks or be due to start a new job in the next four weeks. Actively seeking work means going beyond browsing job vacancies. It means the person is going beyond browsing, for example, by applying for jobs (by submitting their CV) or contacting employers.

For obvious reasons there were less job vacancies and less people actively seeking jobs during the lockdown.

“Underutilisation – a broader measure of spare capacity in the labour market – and hours worked provide a more detailed picture of New Zealand’s labour market than the unemployment rate alone. This quarter, underutilisation rose from 10.4 percent to 12.0 percent – the largest quarterly rise since the series began, while hours worked were down by over 10 percent – another record,” labour market and household statistics senior manager Sean Broughton said.

This quarter, the number of unemployed people fell. At the same time, the number of underemployed people rose by 33,000 and available potential jobseekers rose by 18,900.

Record fall in hours

The total number of hours actually worked in the June 2020 quarter fell 9.3 million hours (10.3 percent) compared with last quarter and decreased 8.2 million hours (9.1 percent) compared with a year ago. These were the largest decreases recorded since the series began in 1986.

Paid hours, as collected in the quarterly employment survey (QES), measure the hours a business paid for, whether their employees were working or on paid leave. Paid hours fell by 3.4 percent over the June 2020 quarter, down to 60.6 million hours (seasonally adjusted). This was the largest quarterly fall in hours paid since the current series began in 1989. The annual decrease (down 1.9 percent) was the largest annual decrease since the December 2009 quarter.

The maximum Covid wage subsidy can only be obtained if workers keep working 80% of their of ‘full time’ hours, and many people has their hours cut by 20%.

Slight fall in employment and jobs

The employment rate fell to 66.9 percent in the June 2020 quarter, down from 67.5 percent last quarter. This reflected a fall in the number of people employed (down 11,000) and a rise in the working-age population (up 20,000).

The fall in the number of people in employment and unemployment this quarter resulted in the labour force participation rate falling to 69.7 percent, down from 70.5 percent (revised) last quarter.

The number of people not in the labour force rose (up 37,000) this quarter, while the number of people in the labour force fell (down 17,000). This was the largest fall in the number of people in the labour force recorded since the global financial crisis.

Filled jobs, as measured by the QES, fell 10,800 in the June 2020 quarter to 1,989,400.

COVID-19 alert system and key events timeline

So with the wage subsidy ending this month the employment crunch is likely to start next month. There are already signals that more jobs will be lost from September, but this could be spread over several months. For example H&J Smith have announced they will close their Dunedin store in January, and will be closing a number of other stores too.

Also from Statistics NZ:

RNZ: What’s lurking behind the four percent job figure?

‘Beware’ and ‘unbelievable’ were the first words Kiwibank’s chief economist Jarrod Kerr used to describe the four percent figure just minutes after the Household Labour Force Survey for the June quarter was released yesterday.

Today, Kerr explains to the Detail’s Sharon Brettkelly what’s behind the numbers.

“The unemployment rate itself is rubbish,” he says – stating a more realistic number is closer to five percent. Underlying numbers tell the real story – 11,000 people laid off, of which 10,000 are women.

The number of people participating in the workforce dropped to 69.7 from 70.5 percent. If you lose your job, not everyone goes onto an unemployment benefit. Kerr has heard of many older people in Auckland who lost their job and are using the opportunity to leave, and head out into the regions. “You have actually lost a worker, and that doesn’t show up in the unemployment rate.”

The under-utilisation rate – showing the numbers of people who want more work – rose from 10 percent to 12 percent, which is the biggest jump in decades. The employment rate is down, wage growth is soft.

“When you were in lockdown you weren’t considered to be unemployed,” he says. “One of the questions asked is, ‘are you actively seeking work?’

“I think it’s ridiculous the Stats department actually published that . We need an ounce of credibility in these figures and we know that the current unemployment rate is nowhere near four percent and it’s just a product of a poor survey in a very difficult time. It’s the publishing of a number that no one can believe.”

Some want to believe the number, or want to promote it for political purposes, but if you look at all the numbers, the reasons and the upward trend in unemployment it becomes believable.

Stuff: Politicians say unemployment crunch will come in September, as official rate marginally drops

Finance Minister Grant Robertson says a drop in the official unemployment rate is a “good result”, but the toughest times for workers will come in September.

There would be no extension to the wage subsidy, and workers who lose their job can receive the Covid-19 income relief payment for 12 weeks. Robertson said the payments, at $490 a week, were “effectively the equivalent of the wage subsidy scheme”.

“We’ve always said that it would be the September quarter where we would see the most impact, but [the unemployment rate] does show that the New Zealand economy has been robust, and that the wage subsidy scheme has done what we wanted it to do.”

To really see the effect of Covid on unemployment we will get a better idea from the next two quarters (we won’t know the December quarter numbers until next year) and the flow on effect could run for a year or two.

And what we don’t know is what is going to happen with Covid – whether we have another outbreak here, how long our borders remain virtually closed, and what effect the world economic situation will have. It is likely to be somewhere between tough and grim.

GDP growth up for June quarter

Statistics New Zealand have announced 0.4% growth in GDP for the June quarter, following a 0.2% increase in the March quarter.

Economic growth boosted by services and primary industries

Growth in services and primary industries supported a 0.4 percent increase in GDP in the June 2015 quarter, Statistics New Zealand said today.

Agricultural production increased 3 percent in the June 2015 quarter, due to increased meat and dairy farming.

“Despite falling milk prices, we’re seeing growth in dairy production,” national accounts manager Gary Dunnet said. “But over the year, agriculture is up only a little, due to dry conditions last summer.”

Food, beverage, and tobacco manufacturing was also up in the June 2015 quarter, due to strong dairy product manufacturing. Inventories of meat and dairy products built up as exports of these goods fell.

Mining also made a partial recovery from recent falls, with a 2.5 percent increase in the latest quarter. The main driver was oil and gas extraction, but this was partly offset by decreases in coal mining and oil exploration.

Collectively, the service industries were up 0.5 percent in the June 2015 quarter, but it was a mixed picture at the lower level – six industries grew and five declined. Growth was driven by business services (up 2.3 percent) and rental, hiring, and real estate services (up 1.1 percent), but these gains were partly offset by a 1.8 percent decrease in transport, postal, and warehousing – the biggest fall since March 2009.

On the expenditure measure of GDP, domestic demand was strong (up 1.3 percent). Household spending was up 0.9 percent, with increased spending on fruit and vegetables, and big-ticket items including cars and furniture. Business investment also increased (2.2 percent) – but this was offset by falling exports and rising imports.

The size of the economy (in current prices) was $241 billion for the year ended June 2015.

More data and analysis: Gross Domestic Product: June 2015 quarter