Firms holding off on hiring until 'sustained improvement in demand'
Employers across New Zealand remain cautious in hiring despite increased business confidence in the December quarter, according to the New Zealand Institute of Economic Research (NZIER).
Its Quarterly Survey of Business Opinion (QSBO) revealed that a net 17% of firms reduced staff numbers in the December quarter.
"A notable proportion of firms intend to reduce investment in buildings, and plant and machinery over the coming year," the NZIER report read. "Firms look to be holding off on investment and hiring until they have more conviction about a sustained improvement in demand in their own business."
Employers' hiring caution aligns with predictions that 2025 will present a challenging market for jobseekers.
Mike Jones, chief economist at BNZ, issued a forecast that the unemployment rate will likely climb further and might peak just below 5.5% in the middle of the year.
These findings come despite business confidence increasing in the final quarter of 2024, as per the QSBO.
A net nine per cent of firms expect general economic conditions to improve in the coming months, up from the previous four per cent that felt downbeat about the economy in the previous quarter.
This is the first time that business confidence turned positive since June 2021, and only the second time since 2017, according to Finance Minister Nicola Willis.
"When businesses have the confidence to invest and grow, it means more jobs and higher incomes for Kiwi," Willis said in a statement. "Businesses know this government has their backs, that's why more and more of them are taking heart that the economy is turning a corner."
The New Zealand government announced late last year that it will hike the minimum wage by a "modest" 1.5% starting April 2025.
Workplace Minister Brooke van Velden attributed the hike to striking a balance between "supporting workers and limiting further costs on businesses."
