New Zealand’s unemployment rate rose to 5.3% in the September quarter as the working age population grew 0.3% while no new jobs were created.

There were 160,000 people looking for work during the three month period and 22,700, or 14.5%, of them had been searching for more than a year.

Youth unemployment rose to 15.9% and the NEET rate, the rate of young people aged 15–24 not in employment, education, or training, was at 13.8%.

Jason Attewell, a spokesperson for Statistics NZ, said unemployment had been above 5% for the past five quarters and the underutilisation rate had risen to 12.9%, a record 406,000 people. 

This includes 138,000 part-time workers who want more hours. Attewell said around two-thirds of these people were women, as they are more likely to work part-time.

Hours worked had been falling steadily for almost two years but the pattern broke this quarter, with seasonally adjusted hours up 0.9%.

In a note prior to the data release, ANZ economists said hours worked had contracted much more sharply than actual employment which suggested firms were “holding onto staff despite subdued demand for goods and services”. 

An uptick in hours could be a sign the labour market is beginning to improve, even as the headline unemployment rate ticks higher due to population growth.

BNZ economists said employment intentions were positive and job ads on Seek had turned upwards, but it was too soon for these indicators to show up in Stats NZ’s September surveys.

The labour market has been weakening since the Reserve Bank began hiking interest rates in late 2021 to combat inflation. Rates have since been cut, but employment tends to lag economic cycles as hiring and firing is done largely in response to changes in demand or earnings.

Economists and the Reserve Bank widely expected the rate to rise to 5.3% in September, up from 5.2% in the previous quarter and a low of 3.2% in late 2021.

Wage growth was moderated by the lack of jobs. Same job pay rose 2.1% while average hourly earnings, which includes job changes, was up 3.9% at $43.60.