A hole in construction employment … really?

By Matt Nolan 12/11/2012

A big deal was made during the release of the Household Labour Force Survey (HLFS) of the decline in construction employment.  According to the HLFS, employees in the construction industry (including the self-employed) fell 4.0% from a year earlier in the September quarter – even as New Zealand’s second biggest city was supposed to be being rebuilt!

What was ignored was that this isn’t the only figure that discusses employment by industry.  A couple of days earlier the Quarterly Employment Survey (QES) was released.  This survey suggested that the number of staff hired by construction firms (excluding the self-employed) rose 5.7% while the hours being paid for in the industry climbed 9.2%!

Source:  Infoshare from Stats NZ

So what do we believe?  That is tough, lets go through some ideas.

  1. The HLFS includes self-employment, the QES doesn’t.
  2. We know that the HLFS isn’t picking up a number of self-employed workers shifting down to Christchurch, neither does the QES.
  3. The QES does capture employed, but not self-employed workers who have just shifted down the Christchurch, the HLFS may miss them (this may be one of the factors behind the lower response rate for example).
  4. The QES occurs in a specific week in the middle of the quarter – if the quarter itself was materially different (in a non-seasonal way) this could explain some variation.
  5. The QES only takes a sample of “economically significant” firms.
  6. Firms and households may classify industries in a different way – making the “construction” sectors incomparable.

See more comparisons here.

The key point is, the HLFS told us that the labour market is very weak.  But it is not clear that construction is weak – in fact the acceleration in economically significant firms hiring and utilising workers suggests the opposite.