This article was first published by Stuff.
Unemployment is expected to rise into 2025 - but will your industry get through unscathed?
The unemployment rate was 4.6% in the June quarter and was expected to get as high as 5.4% by June 2025.
So what industries are likely to experience the highest rate of redundancies over the next six to 18 months?
Printing
Job numbers in this industry had been in a long-term downward trend anyway but the weak economy was placing downward pressure on advertising spending at the moment, which was likely to exacerbate the rate of contraction in the near term, Infometrics chief forecaster Gareth Kiernan said.
“This trend of weaker advertising revenue, along with the increasing digitisation of news and information, is also placing pressure on employment in information media services.”
Textile, clothing, and footwear manufacturing
This was another industry where job numbers had been in a long-term downward trend.
But the ‘shop local’ motto that hit the industry post-Covid provided some respite between 2021 and 2023, Kiernan said.
But unfortunately with the likes of Temu, weak household spending, the reversion of spending trends towards normal and soft international demand conditions had all hastened the return of job losses.
Construction
Residential consent numbers had fallen from 51,015 per annum to 33,632 per annum since May 2022.
“Because there was a large backlog of work, this drop in consent numbers has yet to fully flow through into activity levels, and businesses in the industry are coming under increasing pressure,” Kiernan said.
“We expect consent numbers to stabilise over the next 18 months, but this trend will not present job losses as activity settles at a lower level than during the pandemic boom.”
Non-residential construction was also close to peaking and activity levels were set to drop 20% over the next two years.
“This weakness will also have flow-on effects for industries that supply materials into the construction industry, such as primary metal and metal product manufacturing; non-metallic mineral product manufacturing; fabricated metal product manufacturing; and polymer product and rubber product manufacturing.”
Retail
The retail sector had experienced a tough year with household spending tight and numbers had already been under pressure over the past two years.
Kiernan said demand was expected to start improving from mid-2025 as households refix their mortgages at lower rates, freeing up more money for discretionary spending, and the labour market bottoms out.
“However, until then, employment in retail will remain under pressure, as businesses look to cut costs and continue to battle against the trend towards online sales as well.”
Meat and meat product manufacturing
Just last week Alliance confirmed its Smithfield plant in Timaru would close with the loss of 600 jobs - and it was set to continue for those in the meat industry.
Firstly, it was due to meat prices being relatively weak over the last one to two years, and although there had been some recovery in beef prices, sheep meat prices remained low, which was weighing on stock numbers, Kiernan said.
“More fundamentally, though, are the relative returns from sheep and beef farming versus converting land to forestry. Low prices and higher costs for sheep and beef farming are leading to more land being converted to forestry.
“This shift is not occurring because the returns from the trees themselves are particularly good, especially at the moment given weak demand from China – forestry is another industry where we see job losses occurring in the near term. Instead, it’s because landowners are able to bank the carbon credits,” he said.
- Stuff