Economic and Labour Market Update - May 2010
1. Introduction
The 2010 budget will be delivered on 20 May. Businesses, households and investors are waiting with bated breath for the announcement of new policies pertaining to their sphere. There has been allusion to fiscal change, in order to ‘create a tax system that strengthens the economy, rewards effort, reduces tax avoidance and keeps talented New Zealanders at home’ and an intention to ‘tilt the economy towards exports and investment, and away from consumption and borrowing’.1 Fiscal change has redistributive effects that are non-place specific, and are therefore somewhat divorced from spatial planning at a local or regional level. This is problematic for targeted regional economic development and can create regional imbalances.2 Economic indicators published within the last month have prompted speculation about the timing of the Reserve Bank raising the official cash rate from its record low of 2.5%. This shows considerable optimism for the economic outlook, and is reinforced by reports such as the hiring intentions of New Zealand employers (having improved for a fourth consecutive quarter as business confidence continues to rise to new highs).3 The levels of confidence and the upturn in the economy have however been described as ‘patchy’, given there is little reason to expect strong growth in the near future.4 There are still structural problems in Auckland’s labour market which need addressing, particularly around youth employment opportunities, and the high unemployment rates persistent in Pacific and Maori communities. The labour market is explored in this month’s monitor and new research linking the labour market with spatial economics discussed.
2. Household Labour Force Survey
Over the year end March 2009 to March 2010, the labour force expanded due to demographic changes. There was an increase both in the number of people in the working age population and an increase in the number who were not in the labour force. Overall the labour force participation rate declined (Table 1). The quarterly unemployment rate decreased slightly in Auckland from 8.0% for the December 2009 quarter to 7.9% in the March 2010 quarter. However, a seasonally adjusted annual average shows an increase in the employment rate from 5.1% in March 2009 to 7.3% in March 2010. There are marked differences in the unemployment rate among different groups – in terms of age and ethnicity.
Table 1: Auckland labour force status comparisons
| Quarter end Dec 2009 (snapshot) | Quarter end March 2010 (snapshot) | Year end March 2009 (annual average) | Year end March 2010 (annual average) | |
| Number employed (000) | 654.7 | 653.6 | 660.9 | 651.5 |
| Number unemployed (000) | 57.2 | 56.3 | 35.9 | 51.1 |
| Number not in the labour force (000) | 327.0 | 343.7 | 315.4 | 335.5 |
| Number in the working age population (000) | 1,039.0 | 1,053.6 | 1,012.1 | 1038.1 |
| Labour force participation rate (%) | 68.5 | 67.4 | 68.9 | 67.7 |
| Unemployment rate (%) | 8.0 | 7.9 | 5.1 | 7.3 |
The annual average unemployment rate increased from 9.4% to 13.4% among those aged 20 to 24 years, and the extent of youth unemployment is evident in Figure 1. The Asian ethnic group was the only group to experience a decrease in unemployment rate over the year to March 2010 (Table 2), while unemployment rates continued to increase among Pacific and Maori during this time.
Figure 1. Unemployment rate by age group (rolling annual average) to yr end March 2010
Table 2. Overview of unemployment rates among groups (%)
| Annual average to end March 2010 | Previous quarter (yr end Dec 2009) | Annual average to end March 2009 | |
| Total | 7.3 | 6.9 | 5.1 |
| 15-19 years | 26.9 | 24.2 | 20.3 |
| 20-24 years | 13.4 | 14.1 | 9.4 |
| 25-39 years | 6.1 | 5.7 | 4.3 |
| 40-54 years | 4.7 | 4.4 | 2.9 |
| 55 years + | 3.1 | 3.1 | 2.3 |
| Female | 7.7 | 7.0 | 5.1 |
| Male | 6.9 | 6.8 | 5.2 |
| European | 5.1 | 5.0 | 3.8 |
| Māori | 12.9 | 12.8 | 9.6 |
| Pacific | 14.3 | 14.2 | 9.1 |
| Asian | 8.7 | 7.7 | 10.3 |
| MELAA/Other | 8.7 | 7.4 | 5.1 |
As Table 3 indicates there are clear differences in occupational structure among ethnic groups. For example, European ethnicities are over represented in the manager and professional category, while Pacific are over represented in the labourers category.
Table 3. Occupation by ethnicity (%) (at March 2010)
| Occupation (ANZSCO 1-digit) | European | Māori | Pacific | Asian |
| Managers | 19.2 | 12.4 | 5.8 | 11.6 |
| Professionals | 27.1 | 17.3 | 12.4 | 25.0 |
| Technicians and Trades Workers | 12.4 | 12.4 | 11.9 | 13.0 |
| Community and Personal Service Workers | 8.8 | 11.1 | 12.3 | 8.1 |
| Clerical and Administrative Workers | 15.0 | 14.0 | 15.3 | 10.1 |
| Sales Workers | 8.3 | 7.6 | 6.1 | 9.8 |
| Machinery Operators and Drivers | 4.2 | 12.2 | 12.6 | 6.5 |
| Labourers | 4.7 | 12.4 | 22.4 | 15.8 |
| Total | 100.0 | 100.0 | 100.0 | 100.0 |
Looking at changes in industry structure, between the year end March 2009 and March 2010, there was a decrease in the numbers employed in manufacturing, wholesale and retail, property and business services in the region. There was a slight increase in the numbers employed in utilities and construction, education and the health and community services.
Table 4. Employment by industry
| Industry (ANZSIC96) | Number employed year end March 2009 (000) | Number employed year end March 2010 (000)* | % employed full time year end Mar 2009 | % employed full time year end Mar 2010* |
| Primary | 6.0 | 6.1 | 1.3 | 1.3 |
| Manufacturing | 71.9 | 70.1 | 12.9 | 12.9 |
| Utilities and Construction | 48.1 | 49.0 | 9.0 | 9.7 |
| Wholesale and Retail | 93.4 | 89.7 | 18.1 | 15.8 |
| Accommodation Cafes and Restaurants | 15.4 | 17.2 | 3.2 | 4.3 |
| Transport and Storage | 29.2 | 29.8 | 5.9 | 5.9 |
| Communication Services | 10.1 | 11.2 | 2.1 | 2.8 |
| Finance and Insurance | 25.2 | 25.0 | 5.1 | 4.4 |
| Property and Business Services | 80.4 | 78.3 | 15.3 | 14.8 |
| Education | 35.1 | 37.4 | 7.6 | 7.7 |
| Health and Community Services | 42.0 | 44.4 | 9.1 | 9.6 |
| Other | 49.0 | 50.2 | 9.9 | 10.1 |
| Total including Not Specified | 508.9 | 512.1 | 100.0 | 100.0 |
Note: Data for year end March 2009 uses ANZSIC 96 classification, while data for year end March 2010 uses ANZSIC 06.
3. Building consent indicators
Despite a nationwide fall of 8.3% in the number of new residential units consented for the March 2010 year (seasonally adjusted), the Auckland region had a more modest fall of 2.8%.5 There has been little difference in the seasonally adjusted number of consents issued in the first three months of 2010 in the region. The announcement on tax changes in the budget, especially relating to landlord entitlements, may also impact on housing demand, and perhaps growth of residential units in the future. Figure 2 shows all type of consents issued in the region in March 2010, including residential, commercial and demolitions.
Figure 2. Building consents issued March 2010
4. Spatial economics
There is a growing focus in the region on spatial planning. Spatial economics has a long history, extending back to the writings of Johann Heinrich von Thunen in 1826.6 Although von Thunen’s work was focused on the price of agricultural land as a function of transportation costs to markets and the land rent a farmer could afford to pay, his writings have influenced much of the conventional analytical economic approach to space and distance from markets. The more celebrated writings of Paul Krugman, who won a Nobel prize in economics, explain our current analysis of trade patterns and location of economic activity.7 Spatial economics covers location theory, spatial competition and regional and urban economics. Much of the work undertaken by the Ministry of Economic Development in recent years, and in particular the GUEDO office in Auckland, has focused on core spatial economic questions such as agglomeration in Auckland, the city-region as a driver of economic growth nationally and Auckland’s regional innovation system.8
A seminar co-hosted by the Auckland Regional Council and the Population Association of New Zealand (PANZ) in April contributed further to our understanding of labour market dynamics in the Auckland region. James Newell of Monitoring and Evaluation Research Associates Ltd. (MERA) presented work he has been undertaking on a labour market spatial framework across New Zealand and Australia.9 In this work Newell uses the concept of ‘labour market catchments’ -an analogy taken from natural resource management. Newell explored Auckland’s labour market from the perspective of where people live as well as where they work, and he used case studies to show interesting comparisons and similarities in industry composition of the Auckland labour market region and catchments with other labour market regions and catchments of Australia and New Zealand. In particular, there was an underlying division of Auckland into two major catchments, significant for transport and land use planning, and for the consideration of polycentric nodes within the region. This is useful research as it provides new frameworks for integrated analysis of the regional labour market. In addition, it provides a basis for more detailed analysis of how labour markets work beyond Auckland boundaries.
Prepared by Dr. Catherine Murray, Social and Economic Research and Monitoring Team, Auckland Regional Council.
1. Bill English news release. Source: Beehive.2. Committee for Auckland (2006) Auckland’s contribution to the Government’s surplus in 2005. Available at Committee for Auckland.
3. The Hudson Report and HR Trends. New Zealand Employment Expectations April – June 2010.
4. Tony Alexander, BNZ Monthly Confidence Survey. May 2010.
5. Statistics New Zealand. Consents for new homes fall back from February rise. April 30th Media Release.
6. Von Thunen, J.H. (1826) The Isolated State.
7. Krugman, P. (1993) Geography and Trade. MIT Press.
8. GUEDO.
9. MERA.
Information Community Login
Previous economic updates: