Auckland\u2019s unemployment rate is now 6.4% and Wellington is at 5.8%.<\/p>\n
However, despite the rise in the headline unemployment rate, the December quarter labour market showed some early signs of improvement, said Westpac senior economist Michael Gordon.<\/p>\n
\u201cOverall, we think the results were broadly in line with the Reserve Bank\u2019s forecasts and won\u2019t give them much new to mull over ahead of their [February 18] policy review.\u201d<\/p>\n
Wage growth measures remained unsurprisingly subdued at this stage of the cycle, Gordon said.<\/p>\n
The subdued nature of the data meant there would be little hurry for the Reserve Bank (RBNZ) to start hiking interest rates, he said.<\/p>\n
Financial markets responded by paring back expectations for rate hikes later this year. The New Zealand dollar dropped by about 15 basis points to US60.45c on the news.<\/p>\n
The data was \u201dnot great but better than it looks\u201d, ANZ senior economist Miles Workman said.<\/p>\n
\u201c[It] revealed stronger growth in both labour supply and labour demand than we and the RBNZ expected, he said.<\/p>\n
\u201cBut that certainly doesn\u2019t mean the labour market is on a different (or more worrying) trajectory than expected \u2013 there is plenty of evidence here to suggest the recovery in economic activity is starting to have a positive influence on the labour market.”<\/p>\n
The employment rate was 66.7% in the December 2025 quarter, compared with 66.6% in the September 2025 quarter.<\/p>\n
The labour force participation rate was 70.5% in the December 2025 quarter, compared with 70.3% in the previous quarter.<\/p>\n
Labour force participation indicates the proportion of working-age people who are engaged in the labour market through employment or unemployment.<\/p>\n
The labour force increased by 19,000 over the quarter, as the working-age population rose by 14,000 and the number of people not in the labour force declined by 6000.<\/p>\n
Compared with the September 2025 quarter, 20,000 more women were in the labour force \u2013 16,000 more employed and 4000 more unemployed.<\/p>\n
The December quarter had shown the strongest growth in employment in 18 months, said ASB senior economist Mark Smith.<\/p>\n
The rising workforce participation was also a positive sign, he said.<\/p>\n
\u201cThe economic hole is still large, with the New Zealand economy still around 32,000 jobs shy of late 2023 peaks.\u201d<\/p>\n
The underutilisation rate was 13% in the December 2025 quarter, unchanged from the September 2025 quarter.<\/p>\n
Underutilisation is a broad measure of untapped labour market capacity that includes unemployed and underemployed people, along with the potential labour force.<\/p>\n
Liam Dann is business editor-at-large for the NZ Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.<\/p>\n