The rise in unemployment has underscored the fragile economic recovery that many businesses have been facing recently.
The Employers and Manufacturers Association (EMA) said the slight rise in unemployment to 5.3 percent for the September quarter is disappointing but not unexpected and reflects the ongoing fragility in the business environment.
Alan McDonald, Head of Advocacy at the EMA, said the increase aligns with what the EMA is hearing from its members across the country.
"It’s no surprise the rate has edged up; it’s been widely predicted," said McDonald. "While there has been a recent lift in business confidence, headlines like this tend to knock it back down. It’s a reminder of how fragile the recovery still is."
The EMA said the data point to ongoing caution among employers, with some sectors holding back on investment and hiring due to soft demand and economic uncertainty.
"We’re seeing record numbers of job seekers, and nearly 13 percent of these are NEETs (18- to 24-year-olds who are not in employment, education, or training)," said McDonald.
"That’s a real concern, but we’re encouraged by the approach Minister Upston and the Ministry for Social Development are taking in working more closely with employers and focusing on training and recruitment. That’s the right direction."
Despite the rise in unemployment, the EMA believes there are signs of improvement that may begin to show in future data.
"Unemployment is a lag indicator, and while this result is disappointing, we’re hopeful it marks the peak," said McDonald.
"We’re starting to see some hints of positive movement but it will take time before that’s reflected in hiring intentions.
It’s also likely that a number of those planning on leaving school and other institutions may be staying a bit longer, which may have an upside in those people being better prepared to enter the workforce and having slightly higher skill levels. Alongside economic indicators, several key legislative reforms are underway, including changes to the RMA, infrastructure, immigration, employment law, and vocational education.
"While these reforms will take time to deliver results, they are important steps towards strengthening the business environment and supporting future growth."
The EMA said what businesses need most now is a period of stability.
"When the unemployment numbers do start to turn, we’d expect to see other economic indicators follow suit," said McDonald.
"Even modest growth would be welcome, but what we really need is stability. That’s the message we’re hearing loud and clear from our members."
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