\u201cHigher-frequency indicators have pointed to a modest lift in jobs in recent months, though not outpacing the growth in the working-age population,\u201d Westpac senior economist Michael Gordon said.<\/p>\n
\u201cThe fast-moving developments in the Middle East mean that the labour market surveys will already be somewhat dated on their release.\u201d<\/p>\n
There had been a steadying in the jobs market over the March quarter, he said.<\/p>\n
\u201cThere\u2019s a growing range of evidence that the economy was starting to find its footing again in the early part of this year, at least up until the Iran conflict.<\/p>\n
\u201cBut with the labour market tending to lag the broader economic cycle, we should expect jobs growth and wage demands to remain muted at this stage.\u201d<\/p>\n
While much focus would go on the headline unemployment rate, it would be \u201ca residual of job availability and job seekers\u201d and dependent on a number of different factors, ASB\u2019s Wesley Tanuvasa said.<\/p>\n
\u201cIt would not take much to push the unemployment rate in either direction, with both upside and downside risks.\u201d<\/p>\n
ASB would be looking at wider labour demand (hours worked, hours paid) and broader capacity metrics and the underutilisation rate (those that are either unemployed or would like to work more hours) to assess the underlying trend, he said.<\/p>\n
Tanuvasa noted the Middle East conflict presented challenges to the labour market outlook.<\/p>\n
\u201cWe do not envisage a labour market recovery unfolding until 2027 and cite heightened stagflationary risks over 2026 given higher near-term unemployment and higher near-term inflation in our projections.\u201d<\/p>\n
Job ads had lifted in the quarter and jobseeker numbers were stable, suggesting the labour market deterioration had slowed pre-conflict, BNZ head of research Stephen Toplis said.<\/p>\n
Employment lifted in the fourth quarter of 2025 for the first time in more than a year and he expected this to continue in the first quarter of this year, he said.<\/p>\n
\u201cHowever, our forecasts for improved labour supply would still see the unemployment rate tick up to 5.5%.\u201d<\/p>\n
Despite the war and oil shock, there was scope for economic growth this year, Toplis said.<\/p>\n
\u201cEconomic growth has struggled for the best part of the last two years. The oil price shock is occurring just as businesses were starting to find their feet.<\/p>\n
\u201cHeadline inflation is already above the RBNZ\u2019s 1-3% target band and expected to go much higher,\u201d he said.<\/p>\n
\u201cNonetheless, while any current forecast has a wide error band around it, we remain relatively confident that the New Zealand economy will still eke out some growth this year.\u201d<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.<\/p>\n