Jobseeker benefits already at GFC highs – after just one month

The number of jobseeker benefits has increased by roughly 30,000 (25%) in just four weeks. It took six months for a similar increase during the Global Financial Crisis (GFC). There has never been a bigger monthly increase in our data back to 1960.

Job loss is an easily understood and ‘real’ economic indicator. Jobseeker benefit numbers are one indicator of job losses. The Ministry of Social Development (MSD) is releasing weekly Jobseeker Benefit numbers. There had been around 145,000 Jobseeker beneficiaries in the lead up to COVID-19. Four weeks later, on 17 April 2020, it had increased to nearly 175,000. 

The number of Jobseeker benefits, relative to population, is now just above the peak during the 2008-09 GFC recession, when the unemployment rate peaked at 6½%. The speed of labour market deterioration is unprecedented in New Zealand’s history.

FIGURE 1 THE NUMBER OF JOB SEEKER BENEFITS RELATIVE TO POPULATION HAS ALREADY RISEN TO LAST RECESSION’S HIGHS

Sources: Sense Partners from Lattimore & Eaqub (2011), “The New Zealand Economy: An Introduction”, Statistics New Zealand, MSD

What these numbers do not show is that many employed will be working fewer hours. There is more spare capacity in the labour force than indicated solely by unemployment numbers. More people are looking at job ads on TradeMe in recent days, as our activity tracker shows.  

We will face further waves of business closures and job losses in coming weeks and months. This recession will surpass anything in living memory.

FIGURE 2: THE LATEST ‘EXCESS’ INCREASE IN JOBSEEKER BENEFITS IS 31K, AFTER ACCOUNTING FOR THE LEVEL OF WEEKLY BENEFIT APPLICATIONS THIS YEAR BEING 13k HIGHER THAN LAST YEAR.

Source: MSD

FIGURE 3: JOB LOSSES ARE WIDESPREAD, BUT LARGEST IN THE PROVINCES

Source: MSD

Daily Tracker to 23 April 2020

Lockdown economic data continues to show very low levels of activity. Electricity use has bounced up, partly because of cooler weather. Our index is not adjusted for temperature variations.

Our full dashboard can be seen here.

Economic monitoring is getting much better. Statistics NZ is releasing high frequency economic data here. A really great initiative. We checked out the data compared to ours, they measure similar things. For example, the daily traffic data for Auckland follows a similar pattern, but our data is more up to date.

Daily Tracker to 20 April 2020

Lockdown life continues in economic data.

We are using a lot more internet at home, using less electricity, travelling less, barely flying and doing less things like advertising job vacancies.

But there is encouraging sign that people are slowly thinking about the future, reflected in rising views of job ads (new chart this week; we still haven’t got a retail good spending indicator).

The full dashboard is here.

Job ad views on the Trade Me site has improved a little over the past week, as people consider life after lockdown.

Daily Tracker to 22 April 2020

Lockdown patterns of activity continue. The dashboard is here.

Daily Economy Tracker - the lockdown

We are tracking the NZ economy using daily data to understand the lockdown, the subsequent re-emergence and recovery.

The value of electronic card transactions in retail stores is a grim measure of the immediate impact of the lockdown. The value is currently less than half the level prior to the lockdown. It is less than a tenth of the pre-lockdown level for retailers excluding supermarkets, liquor stores, and pharmacies.

We would expect retail spending to recover after the lockdown. But this indicator may also show if there are lasting impacts on spending because of job losses or changed spending behaviours.

We are tracking data supplied by Marketview, Trademe and Chorus, in addition to publicly available data from Tom Tom, Flightradar24 and the Electricity Authority. 

The economic situation is changing by the day. Rather than reckons, we need to track the economy as close to in real time as possible, to both understand the health of the economy, the policy actions that may be necessary, and the effectiveness of policies implemented.

Our suite of indicators will be a useful complement to officials’ insights into jobless benefit applications, missed payments for utilities and credit relief requests, among others. 

Our first dashboard includes an explanatory note of the data and what they may tell us. We will publish an updated dashboard at least once a week during this time.