NZ economy

N.Z. Employers Unexpectedly Cut Jobs Last Quarter; Kiwi Slumps

New Zealand employers unexpectedly cut payrolls for a third straight quarter, the longest slump since the 2009 global recession, sending the local currency and bond yields lower as job seekers gave up searching for work.

Bloomberg,

7 Febraury, 2013

Employment slumped 1 percent, or 23,000 jobs, from the third quarter, Statistics New Zealand said in a report today in Wellington. The median forecast in a Bloomberg News survey of eight economists was for a 0.4 percent gain in employment. The jobless rate fell to 6.9 percent from 7.3 percent as the participation rate reached the lowest in about eight years.

The nation’s currency headed for its first weekly fall this year as a deteriorating labor market underscored weak domestic demand that may prompt Reserve Bank of New Zealand Governor Graeme Wheeler to extend a period of record-low borrowing costs. Last week, he said the exchange rate’s strength was affecting the nation’s exporters and manufacturers, some of which have elected to shutter plants and fire workers.

“The continued sluggish recovery of the labor market is likely to encourage the RBNZ to remain on the sidelines,” Mark Smith, senior economist at ANZ Bank New Zealand Ltd. in Wellington, said in a Feb. 5 note.

The kiwi dollar extended declines, falling as low as 83.83 U.S. cents, the least since Jan. 31, poised for its first weekly decline this year. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates which is sensitive to interest-rate expectations, fell 3 basis points to 2.90 percent.

Employment fell for three straight quarters for the first time since the January-September period in 2009, today’s report showed. From a year earlier, employment declined 1.4 percent, the first year-on-year decline since the first quarter of 2010.

The report showed the largest drop in the labor force participation rate since the series began. It slumped to 67.2 percent from 68.4 percent in the third quarter, reaching the lowest since the third quarter of 2004.

The central bank has kept borrowing costs at a record-low 2.5 percent since March 2011.

Contractors owed millions by Mainzeal

Stuff,

8 Febraury, 2013

Doug Haselden is a quarter of a million dollars out of pocket and faces forking out his own money to pay his staff's wages.

His concrete company, South Island Shotcrete, did a month-long job for construction giant Mainzeal last year, finishing just before Christmas.

Since then he has been chasing the company for the money he is owed.

Mainzeal went into receivership on Wednesday, which saw many of its work sites around the country shut down and hundreds of subcontractors left in limbo over whether they would get paid.

Haselden met Mainzeal bosses at their Riccarton office yesterday to discuss the debt, and the news was "not good".

"The receivers have got the money. They owe me $264,000 and they knew they were in trouble before I signed the contract. I've been talking to my lawyers."

He was resigned to not being paid.

"I've been chasing them and getting every excuse in the book,'' he said.

"Honestly, I don't think we will [get any money]. They're in such bad shape."

South Island Shotcrete worked on the radar station at Cass Peak on the Port Hills used for air traffic control, completing the job on Christmas Eve.

He had another six jobs lined up with Mainzeal, including more relating to Christchurch International Airport, but said $264,000 left a big hole in the company's turnover.

"I don't have much scraping in the bank. I've got 40 guys working with me. I'm going to do my best [to keep them on, even] if I've got to break into my own funds."

He feared for other contractors caught up with Mainzeal, particularly those working with Vero Insurance, where Mainzeal was a joint project manager for its earthquake repairs.

"Anyone who's insured with Vero now should be absolutely packing themselves because who's going to repair any of their work now? We're all worried as hell."

SUBCONTRACTORS CAUGHT BY SURPRISE

Workers from a Christchurch business owed $1.5 million by Mainzeal rushed to retrieve their equipment from demolition sites as news of the construction giant's receivership broke.

Smith Crane & Construction is among the subcontractors left out of pocket by Mainzeal's receivership.

Smith Crane managing director Tim Smith said his company had partnered Mainzeal to work on the demolition of the 17-storey Clarendon Tower and the Queen Elizabeth II Park sports complex.

He was surprised to hear of Mainzeal's receivership, with no inkling of any problems during their time working together.

"They'd been pretty good right through. We'd been working on the jobs for 12 months and they were challenging, but we'd gone extremely well."

He estimated the company was owed $1.5m by Mainzeal for its work in December and January, but said it would be able to survive the likely loss of the money.

"We're a pretty good sustainable company. I'm in my mid-40s now, and I've been doing this since I was 21. It'll knock our profit down, but we'll be fine," he said.

Smith Crane workers had scrambled to retrieve their tools from the demolition sites as the news broke so they could not be locked up by receivers.

"That was our Waitangi Day activity. We made sure to get everything off the site," Smith said.

He hoped the company could take over Mainzeal's contracts from the Canterbury Earthquake Recovery Authority, but he believed smaller businesses owed money could find themselves in strife as a result of the collapse.

"We've got good assets and good equipment, so we'll survive, but the small guys who buy all their own materials, they might not have the resources to deal with it," Smith said.