Looking on the bright side of job data

The country is still open for business.

But you wouldn’t think so, if you pay too much heed to the bleatings and brayings of the doomsayers.

To what effect, from a confidence perspective?

How many people are going to bother looking for jobs when the news media, economic commentators and too many politicians are banging on about rising unemployment as if the end of the world is nigh?

The publicity thus generated has a powerful negative effect on behaviour.

It’s important to note, therefore, (as BERL economists are emphasising) that employment was increasing when last it was officially measured.

The BERL stuff was a tonic, at a time when pesimistic pin-prickers in Labour’s ranks are making a big deal out of Finance Minister Bill English’s disinclination to bother calling for fresh forecasts from the Treasury every five minutes.

The Labour depressives were at it again at question time yesterday, as the Parliamentary record shows

6. Hon DAVID PARKER (Labour) to the Minister of Finance: What is Treasury’s most recent forecast for unemployment and when did he receive this forecast?

Hon BILL ENGLISH (Minister of Finance) : Treasury’s latest full set of economic forecasts was presented in the Economic and Fiscal Forecasts December 2008. The central forecast showed a peak in the unemployment rate of 6.5 percent midway through 2010.

Hon David Parker: Has the Minister seen criticisms from both business and union leaders saying that the Minister should have been seeking more frequent forecasts on unemployment; and how can he make the best decisions without this crucial information in these extraordinary times?

Hon BILL ENGLISH: Treasury does its forecasts; it is beginning another forecast cycle. I expect I will find on my desk some preliminary estimates from that forecast cycle. It is important to understand that there is a difference—and the member, perhaps, does not know this—between forecasts and updates. Forecasts are when Treasury goes through its cycle to make its own judgments about where unemployment will get to. Probably every day, and certainly every couple of days, information comes across my desk that tells us what is actually happening to unemployment, and we monitor that closely.

Parker came back to have another go, this time throwing the emotive word “misery” into his poison –

Hon David Parker: Why has the Minister been so cavalier about New Zealand unemployment forecasts when he knows that rising unemployment will cause misery for thousands of New Zealand families?

Hon BILL ENGLISH: That question is typical of the nonsense we expect from Labour members, who think that getting forecasts fixes the problem. Well, it does not. We all know, and I will tell the member in case he does not know, that every unemployment forecast shows unemployment rising to around 7 percent in the next 18 months to 2 years. The Government is spending a lot more time on the measures that it needs to take to protect existing jobs and to replace those jobs that will be lost. It was typical of the Labour Government that it spent more time ordering forecasts so it could announce them than actually doing anything.

The analysts at BERL, meanwhile, were tidying up their latest monthly newsletter in which they say the media and their financial-economist commentators become so hyped up with their expectations of doom that they prefer to overlook the facts as they come out.

Alas, it is BERL policy to share this stuff only with subscribers, which means it won’t be posted on their website for a month or so. But they say –

The facts coming through from the Household Labour Force Survey (HLFS) for the December 2008 quarter are that the state of the economy as measured by the HLFS has changed little in the last twelve months.

Employment is still growing. For the year ended December 2008, employment grew by 18,500. This is close to the average for the last five quarters, a 20,500 increase per annum.

Further, the pattern of employment changes continue with no major ‘shocks’, either in the industry employment pattern, the occupation pattern, or in employers shifting from hiring full-time to part-time staff.

Industries continuing to reduce their employees include the primary sector, construction trade services, motor retailing, services to finance, and property services. No surprises there. Those continuing to increase their number of employees include business services, food retailing, sport and recreation, education and community services. There are no industries that have gone from significant employment growth to contraction in the last quarter.

BERL notes that occupations have also followed a pattern similar to the past year.

An occupation that is still growing strongly is finance and sales associate professionals, even though the industry – services to finance – has been declining. BERL wonders if other industries might be taking on these people in-house to strengthen their finances.

Other occupations experiencing growth include business professionals, teachers; and there is even some growth in restaurant and personal service workers. The declines continue for tradespeople, particularly building finishers, mechanics; and for salespersons and clerks.

The occupations that did go from growth to reasonably significant decrease in the quarter were general managers, and architects and engineers. The decline in building tradespeople and in architects and engineers is the process that would be reversed by a sound government-backed investment programme.

Part-time worker numbers increased by 19,300 in the past twelve months, while full-time workers decreased by 800. Some of the financial commentators said this shows employers were turning to casual staff who were ‘easier to let go if need be’. If this were the case, we would expect to see some industries reducing their full-time employees and increasing their part-timers. The facts are otherwise. The industries that increased their part-time employees significantly are those that also increased their full-time employees, namely food retailing, business services, sport and recreation, education and community services.

But the financial sector commentators focussed on the rise in unemployed, with headlines like “All bets off as jobless hit six-year high”.

The BERL team remembers those commentators spending the past six years responding to falling unemployment by egging-on RBNZ governor Alan Bollard to increase interest rates with phrases like “tight labour market” and “over-full employment”.

Given that these moves have, in part, instigated the recession we now face, they remind us, they find it ironic (to say the least) that these same commentators now view rising unemployment as a bad sign.

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