Auckland’s unemployment rate is now 6.4% and Wellington is at 5.8%.
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.
“Overall, we think the results were broadly in line with the Reserve Bank’s forecasts and won’t give them much new to mull over ahead of their [February 18] policy review.”
Wage growth measures remained unsurprisingly subdued at this stage of the cycle, Gordon said.
The subdued nature of the data meant there would be little hurry for the Reserve Bank (RBNZ) to start hiking interest rates, he said.
The data was ”not great but better than it looks”, ANZ senior economist Miles Workman said.
“[It] revealed stronger growth in both labour supply and labour demand than we and the RBNZ expected, he said.
“But that certainly doesn’t mean the labour market is on a different (or more worrying) trajectory than expected – there is plenty of evidence here to suggest the recovery in economic activity is starting to have a positive influence on the labour market.”
The employment rate was 66.7% in the December 2025 quarter, compared with 66.6% in the September 2025 quarter.
The labour force participation rate was 70.5% in the December 2025 quarter, compared with 70.3% in the previous quarter.
Labour force participation indicates the proportion of working-age people who are engaged in the labour market through employment or unemployment.
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.
Compared with the September 2025 quarter, 20,000 more women were in the labour force – 16,000 more employed and 4000 more unemployed.
The December quarter had shown the strongest growth in employment in 18 months, said ASB senior economist Mark Smith.
The rising workforce participation was also a positive sign, he said.
“The economic hole is still large, with the New Zealand economy still around 32,000 jobs shy of late 2023 peaks.”
The underutilisation rate was 13% in the December 2025 quarter, unchanged from the September 2025 quarter.
Underutilisation is a broad measure of untapped labour market capacity that includes unemployed and underemployed people, along with the potential labour force.
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.
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