There was anecdotal evidence that firms holding on to labour were not experiencing the pick-up in demand they expected, which meant more jobs were at risk, he said.<\/p>\n
\u201cA degree of \u2018labour hoarding\u2019 appears to have suppressed unemployment in recent quarters,\u201d he said.<\/p>\n
\u201cIf a recovery in economic momentum doesn\u2019t do the heavy lifting when it comes to \u2018right-sizing\u2019 firms\u2019 labour input, a further reduction in headcount may be needed.\u201d<\/p>\n
AdvertisementAdvertise with NZME.<\/a><\/p>\n With the high-frequency data pointing to an economic slowdown, risks around employment growth over the next few quarters were skewed to the downside, he said.<\/p>\n Workman expects unemployment will rise to 5.3%, worse than the Reserve Bank\u2019s forecast of 5.2%.<\/p>\n He also forecasts the employment rate falling 0.1% (down 0.9% for the year).<\/p>\n It is likely that the level of participation in the labour market \u2013 already low and flattering the unemployment rate \u2013 also fell.<\/p>\n Westpac senior economist Michael Gordon was no more optimistic.<\/p>\n \u201cMonthly data has pointed to further job losses over the quarter, particularly among younger people,\u201d he said.<\/p>\n \u201cWe expect that many of these people will have exited the workforce altogether, dampening the extent of the rise in the unemployment rate.\u201d<\/p>\n The labour market typically lagged the broader economic cycle, so it was understandable we would still be seeing softness at this stage, he said.<\/p>\n \u201cBut it\u2019s possible that this lag will be more prolonged than usual.\u201d<\/p>\n ASB senior economist Mark Smith said he expected the Reserve Bank would likely take \u201cmore signal from trends in labour costs than the unemployment rate\u201d.<\/p>\n AdvertisementAdvertise with NZME.<\/a><\/p>\n \u201cLabour cost growth is expected to cool, with the balance of power firmly tilted towards employers,\u201d he said.<\/p>\n The Labour Cost Index should increase by 0.5% for the quarter, with annual labour cost growth cooling to 2.1%, he said.<\/p>\n That would be the lowest in four years.<\/p>\n More moderate April 2025 increases in the minimum wage would deliver a more modest than usual second-quarter increase.<\/p>\n Annual public sector labour cost growth was expected to ease towards 3% given the Government\u2019s fiscal belt-tightening, he said.<\/p>\n \u201cWe expect wider measures to generally confirm that wage pressures are easing.\u201d<\/p>\n