Short-term employment forecasts 2017-2020 - February 2018
This February 2018 report presents employment forecasts for 2017 to 2020 (March years).
These short-term employment forecasts contribute to our advice relating to setting priorities for immigration, tertiary education and industry training over the next 2-3 years.
Over the next 3 years, employment demand will be strong in response to domestic focused growth: strong activity in the business services and construction sectors. Employment picks up to 2.3% in 2019 and then eases to 1.7% in 2020.
Over the next 3 years to 2020:
- Employment is forecast to grow by 153,000 between 2017 and 2020, but at different levels across the sectors and regions. This growth is supported by strong domestic demand over the forecast period.
- Unemployment rate is expected to decline towards 4.1% over the forecast period, coinciding with labour demand growing faster than net migration driven labour supply growth expected to ease gradually.
- Business services and construction sectors will continue to boost employment over the next 2-3 years.
- Growth in demand for employment in highly skilled occupations (mostly managers and professionals) will be higher than the overall employment growth. Opportunities for lower-skilled workers are expected to account for nearly 28% of the employment growth over this period.
- Employment grows in all regions. North Island growth is highest in the Auckland, Waikato and Wellington regions and there is strong growth across the South Island.
Labour demand weakens as economic growth eases in 2020
The overall employment is forecast to grow by:
- 2.1% (or 52,500) in 2018
- 2.3% (or 56,900) in 2019
- 1.7% (or 43,600) in 2020
This equates to 153,000 (or 2.0% on average) more people employed over the next 3 years.
Figure 1. Employment growth (March years)
Employment rising faster than labour supply growth will make unemployment rate decline towards 4%
The unemployment rate is forecast to decline to 4.1% by the end of the forecast period. With labour supply easing due to gradually declining net migration levels over time, the unemployment rate is forecast to decline steadily over the forecast period. This is despite employment growth declining to 1.7% in 2020 after peaking at 2.3% in 2019.
Figure 2. Unemployment rate
Table 1. Forecast labour market indicators (%), March quarters
|Labour market indicators||2017||2018||2019||2020|
|Labour force participation||70.6||71.0||71.1||71.2|
|Working-age population growth||0.7||0.4||0.4||0.3|
Source: *Household Labour Force Survey, Statistics New Zealand; MBIE, Macro-labour market model
Business services sector and construction continue to boost
Employment will increase in all broad sectors in the 3 years to 2020. The largest increases will be in the business services, construction and utilities, and health and education sectors. These sectors will have sizeable employment growth of between 15,000 and well over 30,000 by 2020, and will grow faster than the national average.
Figure 3. Employment changes by aggregated industries* – 2017 to 2020
Demand will be strongest for highly skilled workers
Highly skilled occupations (mostly managers and professionals) will grow faster (2.9%) than overall employment growth (2.0%) on average between 2017 and 2020. We forecast the demand for skilled workers to increase by 1.8% per year on average over the next 3 years. By 2020, employment in skilled occupation will increase by 16,000 workers.
Table 2. Employment growth by skill level, March years
Source: MBIE, Short-term employment model and occupational/skill decomposition
*Employment forecasts data for 97 occupations can be found at the bottom of this page.
Employment grows in all regions — some rural regions to grow at a faster rate
At a regional level, the highest percentage employment growth will be in the Auckland and Waikato regions in the North Island, and Marlborough, Tasman and the West Coast regions in the South Island.
Overall, 5 out of the 16 regions (2 in the North Island and 3 in the South island) will grow faster than the national average of 2.0% per year over the forecast period.
Table 3. Employment growth by region, 3 years to 2020
|Bay of Plenty||5.1||1.1%|
Source: MBIE-Labour, short-term employment model and regional decomposition
*AAPC- annual average percentage change.
Figure 4: Annual average percentage change (aapc) by region, 2017 - 2020
Data table for Figure 1
Data table for Figure 2
Data table for Figure 3
Extended data table for Figure 3
Extended data table for Table 2