Benefit numbers have been in the headlines again in recent times, as the economy has continued to deteriorate and businesses shed staff and limit hiring in the face of lower sales and activity amid still high input costs. Lower job ads and rising unemployment also means more households fear for their job security, as they wait to roll-off onto lower mortgage rates.

Recent data on main benefit recipients has shown a further rise in benefit need, with a shift in Jobseeker Support recipients a key driver of the rise in main benefit recipients. This article looks at how the number of Jobseekers has changed recently, how different regional labour markets have evolved, what industries have reduced filled job numbers, and expectations for unemployment over the coming year.

The limited number of job opportunities in the labour market has made it difficult for workers who find themselves out of work to quickly transition into a new position, resulting in many registering to receive Jobseeker Support.

The number of Jobseeker Support recipients has increased rapidly this year, reaching around 205,000 in September, up 13%pa from September 2023. This level of support is the highest level of Jobseekers since the December 2020 quarter, where the total number of recipients reached around 212,000 (see Chart 1).

The entire country is evidently struggling, with more businesses publicly reporting being forced to close due to issues exacerbated by current economic conditions, whether that be poor export forestry prices, weak demand from consumers, or supply changes.

The labour market in some parts of the country have appeared to deteriorate quicker than others. Metropolitan areas have appeared to struggle more than rural areas, as indicated by the relative increase in Jobseekers compared to a year ago, although all regions have seen Jobseeker recipients increase by at least 4.5%pa.

The main centres – Auckland, Wellington, and Canterbury – all rank in the top four regions with the largest increase in Jobseeker recipients (see Chart 2).

Wellington has been an area in the spotlight due to the government’s public sector job cuts, with concerns raised about local employment activity and challenges for those losing work. The Wellington region has seen a 17%pa increase in Jobseekers in the September 2024 quarter compared to a year before, the largest increase. The Auckland region ranked second for largest increases in Jobseekers, seeing a 16% increase, followed by Tasman and Canterbury regions which increased 16% and 15% respectively.

Filled job numbers provide insights to identify which industries are struggling and which are still growing despite tough conditions at the broader national level. We can use these higher-level changes to identify which industries may be driving regional labour market declines, and likely drivers of higher Jobseeker recipients. Regions which have larger jobs concentrations in industries that are currently experiencing a fall in demand and employment, are likely struggling the most. Additionally, for those currently losing roles, it is of course also harder to find a new replacement role, and there is more competition for these more limited roles, with more people overall on Jobseeker Support.

Chart 3 shows that filled job numbers in many goods-producing and service industries are declining, with these two broader industry groupings declining -1.9%pa and -0.1%pa over the year to August. Although volatile, primary industries saw a 0.4%pa increase in filled jobs over the same period.

The largest decline by industry was in the administrative and support services industry (-6.9%pa) – the industry which houses labour hire services – meaning businesses are hiring fewer permanent and temporary workers into their teams. Construction had the second largest fall, of 3.9%pa, as particularly residential construction activity falls. Professional services was down too, down 1.6%pa, after being a strong contributor to overall jobs growth in the last couple of years.

In the year to March 2023, the second largest industry in the Wellington region was professional, scientific and technical services making up 14% of total employment in the region, compared to 10% across New Zealand. Similarly, the professional services industry makes up a greater proportion of the Auckland labour market than it does nationally. With filled jobs in the industry falling 1.6%pa nationally over the year to August, it is likely that many workers are struggling to transition into a new position due to a lack of opportunities in the professional services industry.

As another example, retail trade makes up about 9.0% of employment nationally, and a similar proportion in both the Auckland and Wellington regions. Filled jobs in the industry fell 1.8% over the year to August.

Declining employment in these key contributors to the Wellington and Auckland regional labour markets are likely a driving part of the higher Jobseeker recipients we are currently seeing.

We don’t think that the full hit from public sector cutbacks have shown up in labour market data to date, with the redundancy process still ongoing for some, meaning it might not be until late 2024 that the change becomes apparent. The impact will also be less than some of the reporting showing public sector job cuts to date totalling almost 7,000, as a large proportion (perhaps around a third according to our analysis of announcements) of these announced job losses were positions already vacant for some time.

Last year’s election will cause a lot of noise in annual percentage changes in the public administration and safety industry in late 2024, as a significant number of temporary staff at the Electoral Commission were added to filled job counts last year, pushing filled job numbers for this industry up 14%pa in October 2023. Following the previous election in 2020, filled jobs in the public admin industry declined 7.7%pa in the year to October 2021.

Further details on how regional or local labour market performance and structure is available under the labour market section of the Regional Economic Profile. More detailed figures on Jobseeker Support recipients is available in our Quarterly Economic Monitor, with September quarter data set to be released in a few weeks alongside other data for the September quarter.

Next month’s release of the Household Labour Force Survey (HLFS) result will provide us with a look at how the unemployment rate changed over the September quarter. We expect the unemployment rate to rise to about 5.0%, up 0.4 percentage points from June and bringing the total number of unemployed to around 154,000.

We expect the unemployment rate to peak at 5.4% in September 2025, which is around 169,000 people. Households will continue to shift their concerns from high mortgage rates and the cost-of-living crisis to job security as employers are expected to struggle as the effect of interest rate cuts take some time to kick-start the economy.