One-third expect deterioration in general economic outlook over coming months
A quarter of employers in New Zealand have reduced staff numbers in the June quarter as demand for labour weakens, according to the latest data from the Institute of Economic Research (NZIER).
In its survey of 4,300 firms, the NZIER found that labour shortages in New Zealand are easing as employers reduce staff and international borders reopen.
"This softer labour demand and the increased labour supply since the reopening of international borders continued to drive the easing in labour shortages," the report read. "It is now easier for firms to find both skilled and unskilled labour."
The findings offer an explanation for the continuous decline in job ads across New Zealand as of late, with job postings now 30% lower than a year before.
In addition to cautious hiring, employers in New Zealand are wary of investing until they "feel more certain about when demand will recover."
According to the report, 35% of firms plan to reduce investment in buildings, while 27% plan to reduce investment in plant and machinery over the coming year.
"Weak demand has been the dominant factor driving the reduction in capacity pressures in the New Zealand economy, with weak demand increasingly being the key concern for businesses," the report read.
Overall, business confidence continues to decline in New Zealand, with 35% of employers expecting deterioration in the general economic outlook over the coming months.
The construction sector was the "most downbeat" across all sectors in New Zealand, with 65% of employers there anticipating the general economic outlook to worsen.
The pessimism comes as 28% of employers also reported a decline in business activity in the June quarter, higher than the 24% in the prior quarter.
"Overall, these results suggest the potential for a continued slowing in the New Zealand economy over the coming year on the back of higher interest rates and heightened uncertainty," the report read.
