Growing number of firms now looking to hire more staff

Tuesday, 20 October 2020

NZIER says its latest confidence survey backs its expectations of a ‘V-shaped’ recovery.

Job prospects may be improving with a net 16 per cent of businesses expecting to take on additional staff within the next three months, according to the New Zealand Institute of Economic Research.

The NZIER’s closely watched quarterly survey of business opinion found a growing number of firms surveyed between September 17 and October 13 were feeling more positive about expanding.

“This is particularly the case when it comes to hiring, with a net 16 per cent of firms looking to increase headcount in the next quarter,” NZIER said.

“This recovery in employment demand has seen skilled labour shortages re-emerge, with a net 18 per cent of businesses reporting difficulty in finding skilled labour.

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“Although firms are still cautious about investment with a net 10 per cent of businesses planning to cut back on investment in buildings, this caution is ebbing,” it said.

NZIER said the building industry was the most confident with a net 7 per cent of construction sector firms expecting an improvement in the economy over the coming months.

Manufacturers were also feeling less pessimistic, despite weak export sales in the September quarter, it said.

“Profitability expectations are improving, and that is making manufacturers feel more positive about hiring.”

Retailers and the services sector were more downbeat.

“Although retailers report stronger demand and increased pricing power, profitability in the retail sector remains subdued given intense cost pressures,” it said.

“The services sector is now the most pessimistic of the sectors surveyed, with a net 49 per cent of firms expecting a worsening in general economic conditions over the coming months.”

Overall, a net 1 per cent of businesses reported an increase in own trading activity – a turnaround from the net 37 per cent reporting a decline in the previous quarter.

Businesses on the whole were still feeling downbeat, but that pessimism was reducing with a net 39 per cent of businesses expecting a deterioration in general economic conditions over the coming months – from 58 per cent in the previous quarter, it said.

ANZ said the survey reflected the resumption of activity after lockdown disruptions in the second quarter.

“The bounce has been supported by pent‑up demand, fiscal support, strong housing and construction activity, and a cushion from domestic tourism through winter, plus the feel-good vibe from our Covid‑free status,” it said.

“Although profit challenges remain and hiring has reduced, firms are feeling better about increasing headcount in the time ahead,” it said.

But it forecast the rebound would run out of puff, “especially as we move into 2021”.

“At that point, the challenges associated with the current downturn will become more apparent and current expectations and intentions may not be borne out,” ANZ said.