What the hell does my title mean.
Well, let me be straight up – the headline number is a lot worse than expected … especially by me personally.
However, the more general “underutilisation” measure (the number unemployed + the number of people who want more hours all as a proportion of the labour market) was in-line with what I felt were my overly optimistic expectations!
What does this suggest – well it sort of suggests that the people that were laid off during the December quarter were the people who wanted more hours in September, sort of (as we are excluding normal seasonal factors as well).
But so what, the past sucked. Forward looking expectations are strong, our trading partners are genuinely recovering, and we have an intelligent Reserve Bank that understands how to balance inflation expectations and prevent arbitrary pain in the economy. When we see hours worked pick up it is game on – that is the one to watch.
Economic activity will remain below trend for some time, unemployment will stay higher than we would like for some time. But surprising even the shock of a much higher UR number is enough to suggest that the outlook is significantly worse than it was. Why is this surprising? If you had told me that UR=7.3% yesterday without telling me about underutilisation I would have been in a mild state of shock. However, putting these numbers in context has eased my mind.
The unemployment issue is a lot more complicated then it is being made out to be methinks – it looks like NZ is undergoing a structural shift as well as a standard “recession”, blaming the government doesn’t make sense in this type of case. For an example, look at manufacturing employment …