Leading indicator of employment

A new indicator predicting when there are likely to be significant changes in the labour market has been launched by the Department of Labour.

The Leading Indicator of Employment combines five indicators covering different sectors of the New Zealand economy and has proved to be extremely successful in predicting peaks and troughs in the labour market in the past.

The Department’s Head of Labour Market Information, Benedikte Jensen, says the feedback from other Government departments and trading banks has been extremely positive.

“Testing of the Indicator shows that it would have successfully forecast the current downturn in employment nine months before it happened,” Ms Jensen says. “It will help businesses plan their workforce so they are fully prepared for upswings and downturns in the labour market.”

The Indicator collates its information from the number of permanent and long-term arrivals, the Quarterly Survey of Business Opinion, the New Zealand share price index and the ANZ Commodity Price Index. It also includes the Southern Oscillation Index, which measures changes in weather patterns which could affect agricultural output and employment.

Although the Indicator’s main function is to predict peaks and troughs in the labour market it can also forecast employment growth for the subsequent three quarters.

The Leading Indicator of Employment will be issued quarterly, following the release of the Household Labour Force Survey.

For more information about the Leading Indicator of Employment go to

http://dol.govt.nz/publications/lmr/lioe/