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Unless Christchurch’s insurance woes and other problems are sorted out soon there may be a negative  impact on national unemployment. There are already signs that the job market in Canterbury has dropped dramatically and unemployment rates may climb as a result.

Our advice to people planning to move to Christchurch is to wait until you have contract for definite work, the jobs don’t seem to be there right now.

Based on a sudden drop in job adverts, which  an economist at the ANZ National Bank sees as a red flag, the Christchurch rebuild could be stalling before it really gets started

The ANZ’s latest analysis of the nationwide job market shows a dramatic drop in Canterbury.  In a TV interview which can be seen here Sharon Zollner, an economist at ANZ National Bank, said

“Job advertising data for august was a very timely barometer of the labour market, it gives you a sixth month lead on the unemployment rate.

” August actually dropped reasonably sharply and looking at it it was based in Christchurch. The data can be a little bit volatile month to month so we tend to focus on a three month average and that is still holding up reasonably well and it suggests that the unemployment rate may improve a little bit from here but pretty much static.”

When asked what that dramatic falls meant for Canterbury Zollner said

“Well it’s not a great sign but as i said the data can be volatile so perhaps the whole country’s just on hold for the world cup so we’ll have to wait and see another month or two but it does suggest that the momentum that has been building very nicely in Christchurch could be starting to stall…”

But then went on to say that insurance problems were causing delays, which could effect their estimate of when the rebuild will get going in earnest.

“We are hearing anecdotes that insurance woes are causing delays so we’re probably likely to push back our estimate of when that rebuild is really going to get underway and we do so the risk of a bit of a soft patch between the end of the relatively straightforward demolition phase and the rebuild really getting underway. And it matters, because the Reserve Bank really made it clear that the timing of the rebuild will impact when they tighten rates.”

She was asked  if the trend was to continue over the next couple of months and what will be the likely impact on the unemployment.

“It depends on how sharp the fall continues, it’s unlikely to keep falling at that sort of rate month to month but we have an unemployment rate currently 6.5 I guess it could go up to 6.6 or something or 6.7 but at the moment it’s still pointing in the other direction and let’s hope it continues to do so….[the figures] they’re a little bit of a red flag but we will be watching the next couple of months with great interest.” source

Insurance woes continue for Christchurch

One of the major problems for the city is that it is extremely  difficult to get insurance for buildings in the Christchurch area.  Next is another recent news report showing how much this is impacting  on the start of the rebuild, so much so that Gerry Brownlee went to Europe to woo the international insurance industry. Unfortunately it looks like he may have failed and the NZ taxpayer may have to come up with a huge financial guarantee to sweeten the deal (more on that here)

Rebuilding in Christchurch has been affected by ongoing insurance struggles

Wed, 14 Sep 2011 7:00p.m.

“Two steps forward, three steps back – it’s a dance thousands of Christchurch homeowners and businesses find themselves doing following the quakes.

Leading are the insurance companies, who appear increasingly out of step with public opinion. Concern is so high that Earthquake Recovery Minister Gerry Brownlee is overseas, trying to convince reinsurers to change their tune.

At stake are the rebuild of Christchurch and the ability of businesses and homeowners to move forward…”  Watch the video for the full report from John Selwood

One of the factors giving insurance companies the jitters are the thousands of aftershocks and damaging quakes that have affected the area over the last year, until those stop even the government may hold off putting its hand in its pocket. This from Interest.co.nz

Reserve Bank pushes back expectation for quake reconstruction, as aftershocks hinder planning, building, and insurance

Posted in Property September 15, 2011 – 09:12am, Alex Tarrant

“The Reserve Bank says it seems unlikely reconstruction activity will pick up in Christchurch as soon as previously expected, as aftershocks have hindered planning and building, and as private insurers hold back from insuring new buildings.

The Reserve Bank is closely watching for inflation pressures stemming from the Christchurch rebuild as part of its assessment of when to raise interest rates, and by how much. Today it left the Official Cash Rate on hold at 2.5%, and lowered its expected 90-day interest rate track into 2014 by 60 basis points, indicating the OCR would be ‘lower for longer’.

Repairs and rebuilding in the city would have a substantial influence on economic activity in New Zealand, with construction activity boosted for several years, creating resource shortages in the building industry and other parts of the economy more generally, the Reserve Bank said in its September quarter Monetary Policy Statement… more here