18 February 2016

NZ update: Construction recruiters in Auckland driving flash new cars

One of the best indicators of a country’s economic performance is the level of recruitment agency activity. Whether it’s strong organic growth or hot levels of M&A activity, you can be sure that recruitment agency profit levels make new markets attractive for aggressive agency owners with deep pockets or strong credit ratings.
I am a big fan of New Zealand’s preeminent recruitment agency blogger, Jonathan Rice (owner of rec-to-rec firm, Rice Consulting) for his incisive and witty weekly blog The Whiteboard on all things to do with the NZ recruitment scene.

A couple of Jonathan’s recent posts have highlighted the growth in the numbers of recruitment agencies in the local market, especially the influx of overseas operators hanging out their shingle or buying locally-owned agencies.

All this activity indicates that the times are good in the NZ economy and the recent Statistics New Zealand Labour Market Statistics: December 2015 quarter appears to strongly support the positive economic position.

Category Dec 2015 Change from Dec 2014
Employed 3,656,000 +2.3%
Unemployed 133,000 -6.7%
Unemployment rate 5.3% -0.7 percentage points
Filled jobs 1,848,000 +2.7%
Participation rate 68.4% -1.0 percentage points
Total weekly paid hours 57.1 million +3.8%
Wage inflation (since Dec 2014)                                  +1.5%

Selected Statistics New Zealand commentary

Highlight 1: The good news for unemployment is widespread 
  • 5.3% is the lowest unemployment rate since March 2009 (when it was 5.2%). This fall reflected 16,000 fewer people being unemployed over the quarter.
  • Over the 2015 year, the number of unemployed men was unchanged, while the number of unemployed women was down 10,000.
  • In the year to December 2015, the unemployment rate for the North Island fell 0.6 percentage points, to 5.6%, while that for the South Island was unchanged, at 4.1%.
  • The unemployment rate for Māori fell 1.6 percentage points to 10.6%in the year ended December 2015 The unemployment rate for Pacific peoples dropped over the 2015 year to 9.7% (from 11.4% a year earlier)

Highlight 2: Auckland construction industry recruiters are probably driving flash new cars 
  • Annual employment growth in Auckland increased 2.9% in the December 2015 quarter, after dropping to 1.5% last quarter. This came from 23,100 more people being employed in Auckland over the year
  • The construction industry was the largest contributor to annual employment growth, with 27,500 more people employed over the year to December 2015.
  • The majority of construction employment growth was in Auckland, with 18,900 more people employed over 2015. 
  • Technicians and trade workers also had a large employment growth, with 20,800 more people employed in this occupation group over the year.

Highlight 3: Wages growth continues to beat inflation growth 
  • In the year to December 2015, prices of goods and services bought by households, as measured by the consumers’ price index (CPI) increased 0.1% – the lowest annual increase since 1999.
  • The Labour Cost Index salary and wage rates (including overtime) increased 1.5% over the same period. The bad news for employees is that this is the lowest annual increase since the March 2010 quarter.
  • Wage inflation has now been higher or equal to the CPI for more than four years.

Lowlight 1: Labour force participation rates continue to drop 
  • The labour force participation rate continued to decline from a record high in the March 2015 quarter. This is the third quarter in a row in which labour force participation has fallen.
  • This continuing decrease in labour force participation was partly due to more retirees (up 31,500), and more people at home but not looking after children (up 15,400).

One of the key statistics driving recruitment agency growth is the ‘Filled jobs’ category. A 2.7% annual rise over the most recent 12 month survey period (January 2015 – December 2015) comes on top of a 2.5% rise in the 12 month period, January 2014 – December 2014 and a 1.9% rise in the 12 month period, January 2013 – December 2013.

If this New Zealand ‘Filled jobs’ growth continues its current momentum, you can sure that there will be plenty more upcoming Kiwi recruitment agency growth and acquisition activity worth writing about on The Whiteboard … and an increasing number of Kiwi recruiters driving flash new cars.

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1 comment:

  1. George Smith19/2/16 7:52 AM

    OK, some interesting pointers - but some clarification required;

    Flash Cars - Funnily enough leasing cars in NZ quite a bit different in regards to tax than OZ - there is no real advantage - one recruiter has well over 600 contractors out and drives a mid 2000's Japanese SUV - but does have a real estate portfolio that would make you cry - must have something to do with no stamp duty and no capital gains tax !!!

    Auckland is on the cusp of some staggering growth - Christchurch build is starting to slow , and alot of construction staff will be re deployed to Auckland - with positive migration now in full force and the majority moving to the Auckland area , any construction recruiter based in Akl will be licking their lips in anticipation

    The bar is very very low when it comes to opening a company in NZ - $50 and about 10 minutes online to register will get you going

    Acquisition - here is an interesting situation - the majority of NZ recruiters ended up working out they could earn more for doing less and opened on their own and the majority have the "3B disease" ( Boat , BMW, Bach-holiday house ) - so when they get told they will get a little cash, and then have an onerous 3 yr buy out where they have to report to someone again and then be under a 3 to 5 year restraint - doesn't take Einstein to work out if you keep doing what you are doing , at the end of an 8 year period you probably have the same amount of $$$ and not have to report to an Australian based boss ( don't underestimate how much of a killer that is! )

    I suspect more will diversify into construction, there will not be many acquisitions and we will keep taking pot shots at Australia and how badly the economy is doing and how many large companies keep closing