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Monthly Economic Indicators

Special Topic: Employment trends and prospects

This Special Topic reviews the major sources of job growth over the past ten years and discusses employment prospects over the year ahead. 

Labour market performance

Employment grew rapidly between 1993 and late 1996.  The employment rate – the percentage of the working-age population in work – rose over 5 percentage points in just 3 years (Figure 9).  From its peak in late 1995 employment growth began to slow and then to contract, leading to a fall in the employment rate and rising unemployment.

Figure 9 – Labour market growth
Figure 9 – Labour market growth.
Source:  Statistics NZ

From the end of the late 1990s contraction to September 2008 employment grew at an average rate of over 2% per year and the employment rate rose before stabilising at around 66% of the working-age population.  The number of people employed increased by 420,000 to 2.172 million, the highest ever in the Household Labour Force Survey (Figure 10).

Figure 10 – Employment growth
Figure 10 – Employment growth.
Source:  Statistics NZ

The September 2008 quarter also recorded the highest ever level of female employment, which reached 1.015 million.  Part-time employment (less than 30 hours per week) accounts for 23% of total employment, although this proportion has been falling over the last decade, with 85% of the increase in employment since 1998 being full-time employment.

Sources of labour demand

Over an economic cycle some areas of the economy typically expand more rapidly than others.  In the labour market this characteristic is reflected in changes in the industry share of total employment.

Over the last 10 years the largest increases in employment shares have been in the construction, property and business services, and health and community services industries.  Despite a large increase in numbers employed, retail and wholesale trade fell as a share of total employment.  The largest falls in employment shares, and the only falls in numbers employed, have been in the manufacturing, and agriculture, forestry and fishing industries (Table 1).

Table 1 – Employment growth and shares 1998-2008
Industry Change in employment (000) Change in share (%)

Agriculture, forestry & fishing









Electricity, gas and water






Wholesale and retail trade



Transport and storage



Communication services



Accommodation, cafes and restaurants



Property and business services



Finance and insurance






Health and community services



Other (incl govt admin & defence, cultural & recreational, and personal & other services)



Source:  Statistics NZ

Employment outlook

The Treasury’s Pre-Election Economic and Fiscal Update (PREFU) forecast weak economic activity and declining employment over 2009. Key drivers of the outlook include slowing private consumption growth, falling residential investment and weak international demand.  In the labour market, these factors are likely to be reflected in declining employment, and falling employment shares in the construction, and retail and wholesale industries.  The tourism sector, which encompasses a range of service industries, is also likely to experience a decline in jobs, even as the exchange rate falls, due to slowing international income growth.


Employment in the construction industry peaked in late 2006, and numbers have subsequently fallen by around 11,000 (Figure 11). Based on the low level of building consents being granted, further falls are likely.  Over the last few months the total number of dwelling consents has been around 40% lower than a year ago.  Ultimately, the slump in consents will be reflected in reduced building activity and a significant decline in the number of jobs available.

Figure 11 – Investment and employment in the construction sector
Figure 11 – Investment and employment in the construction sector.
Source:  Statistics NZ

Non-residential consents have declined by a more modest 14% from last year and have been rising over the past three months. The public sector has been one source of growth, and will likely continue to be so as the government seeks to implement its policy of investing an additional $500 million in schools over the next three years. The incoming government’s commitment to additional infrastructure spending ($8.5 billion over the next 6 years) will also help sustain jobs.

Retail and wholesale trade

The expected weakness in private consumption spending and in international tourist arrivals will force retailers and their wholesale suppliers to carefully examine their cost structures, with job losses a likely casualty.  Negative employment intentions for the industry reflect these pressures (Figure 12). Declining numbers of tourists will also impact across a number of other industries including accommodation, cafes and restaurants, and cultural and recreational services.

Figure 12 – Retail and wholesale employment intentions
Figure 12 – Retail and wholesale employment intentions.
Source:  ANZ National Bank, NZIER

Other sectors

Across the economy, the net balance between job creation and destruction is tilted towards the latter.  However, some firms and industries, for example health, education, business services, and personal services, are likely to continue to expand.  The net balance of forces for the primary and manufacturing industries, which benefit from a declining exchange rate but at the expense of weaker world demand, appears evenly balanced, suggesting a stable employment outlook.

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