Expectations for growth in the first half of the year have been weak. Photo: 123RF
The economic headwinds are getting stronger as the jobs market and retail spending weaken further, raising doubts about whether the economy will escape recession.
Expectations for growth in the first half of the year have been weak, with forecasts of little or no growth and possibly a prolonging of the recession.
But the latest BNZ-Seek employment report showed a 4.8 percent fall in the number of job adverts in May, following on a 4.9 percent drop in April. The number of jobs advertised was down 30.5 percent on a year ago, the weakest since February 2016, outside of the Covid-19 lockdowns.
BNZ senior economist Doug Steel said more people chasing fewer jobs meant higher unemployment.
"We think it can get up to around 5.5 percent by the middle of next year, and what's worrying is that the trend is continuing to fall in job adverts - and if it continues, then the unemployment might rise above 5.5 percent."
But he said the high level of departures and a falling number of migrant arrivals might slow growth in the labour force and take some pressure off unemployment.
The number of people applying for each position was up nearly 70 percent on a year ago.
The two job categories with high rises in job ads were mining and energy, and advertising arts and media.
Steel said a weakening in the labour market would increase job insecurity, which in turn would make households further control spending.
No retail therapy
That seemed borne out by partial retail numbers, which showed a 1.1 percent fall in spending last month in April, the fourth consecutive monthly fall, to be down 1.6 percent on a year ago.
The Stats NZ data does not take account of price movements caused by inflation, discounting or changing commodity prices.
"With headwinds facing consumers unlikely to abate any time soon, we expect to see more of the same over the coming months," ASB senior economist Kim Mundy said.
Groceries were the only category to show a rise, a meagre 0.1 percent, while there were sizeable falls in big ticket items and fuel.
"Tax changes may not provide too much relief if cautious consumers opt to save a chunk," Mundy said.
BNZ's Steel said many of the economic indicators for the second quarter of the year seemed negative and adjusting for inflation and population growth and the outlook was looking even more negative.
"These are downside risks to gross domestic product, we think first quarter GDP numbers out next week are going to be soft to negative and what we're seeing in the second quarter doesn't look like it's going to be any better, in fact they may be worse."