Many think recession has peaked

Many people think the worst may be over, though the recession is still hurting about half the population, a survey has found.

The Research New Zealand survey suggesting the effects of recession may have peaked comes ahead of the Government jobs summit meeting on Friday, which is aimed at finding ways to save jobs.

While some economists expect the unemployment rate to rise to more than 7 percent in time because of the global economic slowdown, independent economics firm Berl says job numbers are still growing, with no big job loss "shocks".

This month's Research NZ survey shows 49 percent of people say their financial position is worse or a lot worse than a year ago. Last year, that figure peaked at 56 percent saying they felt worse off.

"This indicates that while the recession is biting for about half of New Zealanders, the negative effects of the recession may have peaked for now, for others," Research NZ director Emanuel Kalafatelis said.

Almost a third of those surveyed this month said their financial position had not changed.

There was a small fall in the numbers saying they were better off, down to 18 percent, despite big falls in petrol prices and tax cuts taking effect late last year.

The Reserve Bank has slashed official interest rates from 8.25 percent in the middle of last year to 3.5 percent in January, which is feeding into much lower mortgage rates. With many people on fixed term mortgages that will take time to cut mortgage costs.

In October, 81 percent of people said the economic downturn was hitting their financial situation. By this month, that was down to 71 percent, well below the high of 90 percent in September.

"A trend is emerging with fewer people reporting an impact," Mr Kalafatelis said.

Berl points out that in 2008, job numbers grew by more than 18,000, despite the recession. The rise was close to the recent average annual growth of about 20,000.

Unemployment rose from 4.2 percent to 4.6 percent in the December quarter, a six-year high, but still low compared with past recessions.

There had been no big shocks in the pattern of employment by industry or occupation, or a switch from full-time to part-time workers, Berl says in its latest report.

Jobs are being cut in farm-related sectors, building industries, car sales and property services.

The main cuts were in the home building and commercial construction sectors.

But Berl says there are no surprises there, and that opened the door to a "desperately" needed lift in infrastructure work.

A media report on a New Zealand Institute paper at the weekend claimed the jobless rate could rise to more than 11 percent from today's 4.6 percent.

The NZ Institute document itself says this was a "simple extrapolation" of a United States study that may be misleading in New Zealand's case.

Labour markets had become more flexible in advanced countries such as New Zealand, so the jobs impact of the global credit crisis may be less extreme than predicted on the basis of historic averages, the institute report says.

- © Fairfax NZ News