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Source: ONE News -
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It may seem strange, that just when people like me are spouting on about a recovery in stock markets and dairy commodity prices, unemployment really starts to get nasty.
But that is the economic reality.
While the recession could be over technically by the year's end, the real day to day economy is still traumatised from the sustained slide in economic activity that we have seen over the last 16 months.
Many firms, particularly those in manufacturing and construction, are only just now coming out of survival mode.
According to some economists the actual number of jobs lost was not the main problem this time, down just 0.4% in the quarter and just under market forecasts.
No, the main reason for the spike in the headline unemployment rate in the quarter was the combination of falling employment and an increase in the working age population or the number of people actually out looking for jobs.
But why is unemployment only now starting to kick in when we've had a recessionary climate since last year?
Westpac economists say the reason for this is that at the start of the recession, when a worker lost their job they were able to find new work pretty easily because the job market was still very tight from the boom.
That is not the case now.
So expect the jobless rate to climb towards the 7.5% mark next year as forecast by Treasury in the Budget.
With those sorts of numbers, job security is going to clearly remain a big issue for Kiwis.
That means we also can not expect to have a consumer-led recovery over the next year.
Retail and tourism, for example, are likely to remain sluggish.
So what is going to turn things around?
Most economists and the Reserve Bank would like it to be a boost in demand for New Zealand's exports helped by a falling dollar.
However, while there are signs commodity prices are trending back up, the dollar does not look to be playing ball.
Thursday's figures, while they will not be welcomed by the
Reserve Bank, will allow it at least to keep interest rates low
well into next year as promised.
Inevitably, comparisons will be made with the US which is reporting
its unemployment on Saturday morning our time. This will show their
rate getting close to 10%.
But while it is encouraging that New Zealand is not likely to get that high, it is still little comfort for the 1,000 joining the dole queue each week or for a government under constant pressure to do something about it.
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