Economy seen climbing out of hole
New Zealand's economy is recovering from one of the "deepest and longest" recessions in living memory, but this year and next should be better, according to latest NZIER forecasts.
Despite the recent spate of high-profile job cuts, NZIER's latest Quarterly Predictions show growth of 2 per cent to 2.5 per cent over the next few years, in a patchy recovery driven by the Canterbury rebuild and an improving picture in Auckland.
A stronger economy would mean much-needed relief, with more jobs and rising incomes, and businesses would see more sales and greater profit margins, NZIER said.
But recent headlines have been gloomy on the jobs front.
Telecom announced plans to cut hundreds of jobs just a day after 1200 jobs were put at risk by the financial crisis at debt-laden Solid Energy. There have also been warnings of hundreds of job losses at Mainzeal, Contact Energy, NZ Post, Summit Wool Spinners and print company Geon Group.
NZIER principal economist Shamubeel Eaqub said despite the headlines, the surveys of hiring intentions and actual hiring were "not quite as weak".
And there had been a big regional difference in the labour market, with jobs in Auckland well up on 2007, but well down in Wellington, and flat in the provinces.
"And Canterbury is now starting to rebound from the earthquake [two years ago]," he said.
Consents for non-residential building in Canterbury were at record highs, and house consents are back close to recent peaks.
"Concrete production is the highest it has ever been," he said. That was an indication that the rebuild was really gearing up.
There were massive amounts of building work across retail, office and industrial buildings, but it was all in the suburbs, rather than in the central city.
"In the last six months it has really come together; it is very encouraging," Eaqub said.
But Wellington had had weak job numbers in the past three years.
Overall, the picture was patchy but the outlook was improving.
Spending was up and people were buying more homes, but activity was concentrated in Auckland and Canterbury, where building consents were also starting to lift in both regions.
"There is a recovery taking place, but it is very regionally focused," Eaqub said.
Provincial areas faced a tougher picture, with dry farm conditions in some areas.