Photo: RNZ
Unemployment rises to 10 year high of 5.4 percent
15,000 jobs added in quarter, but workforce and job hunters grow
Underutilisation rate steady at five year high of 13 pct
Youth unemployment rises, more woman in the labour force
Annual wage growth slows to near five year low of 2 percent
Data worse than expected, backs the RBNZ holding cash rate steady in two weeks
Unemployment rose to its highest level in more than a decade, with more people chasing work than jobs created, while wage growth slowed further.
Stats NZ numbers showed the unemployment rate rising to 5.4 percent in the three months ended December, from 5.3 percent in the previous quarter. It was the highest level since March 2015.
“Over the quarter, we saw higher levels of engagement in the labour market as both employment and unemployment increased,” macroeconomic spokesperson Jason Attewell said.
A total of 165,000 people were unemployed, a rise of 4000 on the previous quarter and 10,000 on a year ago.
The data was worse than forecast by economists and the Reserve Bank.
Nicola Willis
Photo: RNZ / Mark Papalii
Unemployment has been steadily rising as businesses either sacked staff or stopped hiring because of the weak economy, while the workforce has increased despite a slowdown in migration.
The level of underutilisation, including the unemployed and under-employed, used as a measure of slack in the jobs market, held at 13 percent, the highest rate since late 2020.
The number employed increased by about 15,000 in the quarter, the strongest quarterly growth in two years, however, the economy still had more than 30,000 fewer jobs than two years ago.
The level of unemployment of people between 15 and 24 years was 16.5 percent, with the total not in education or training falling to 13.7 percent.
Stats NZ said there was a noticeable increase in the number of women in the labour force, with another 20,000 joining in the quarter, many going into part time employment.
The regions with the highest unemployment were Auckland, Wellington and Waikato with rates close to 6 percent, with all South Island regions below 5 percent.
The broad measure of wages showed overall growth slowing to a four year low of 2 percent from 2.1 percent, compared with a 3.1 percent rise in consumer prices.
The data was above Reserve Bank forecasts and backs the central bank holding the official cash rate at 2.25 percent later this month.
Not as bad it looks
Economists said the numbers looked a bit ugly at the headline level, but underneath there were positive indicators such as more jobs added to the economy and more people joining the workforce and looking for work.
“The underlying details show the labour market is rounding a corner,” ANZ senior economist Miles Workman said.
“Employment growth … was stronger than expected … and shows firms are once again adding to headcount, while the higher participation rate is consistent with improving economic activity, bolstering perceptions that opportunities in the labour market are on the rise.”
Westpac senior economist Michael Gordon said the Reserve Bank was unlikely to be moved by the numbers.
“There is little here to hurry the RBNZ quickly towards reversing those last 75 basis points of cash rate cuts made after August 2025.
“Muted wage pressures should imply there is time to assess the strength and durability of the recovery before raising rates. We remain comfortable with our forecast of a December 2026 first rate hike.”
Finance Minister Nicola Willis said the addition of 15,000 jobs during the quarter, along with more hours worked, and people looking for work were all positive signs of an economy turning around.
“We would prefer the rate to be lower still but the underlying details are positive and economists are expecting the unemployment rate to fall this year as the economy recovers.”
Still tough now
The head of advocacy at the Auckland-based Employers and Manufacturers Association, Alan McDonald, accepted that job creation would be slow to occur, but said the higher unemployment rate was a disappointment.
“One of the things we’re still seeing is that for every good number that comes out, like the business confidence one, you see a bad one like liquidations, both of which are at decade highs.
“The forward looking story is looking good but the on the ground story is looking a bit tough.”
The Council Of Trade Unions said the unemployment rate showed working people bearing the cost of the government economic “mismanagement”.
“The government has no plan to tackle this growing emergency. Instead of real solutions, they’re promising more spending cuts, more workers thrown on the scrap heap,” CTU president Sandra Grey said.
“There is no recovery in the economy unless people are feeling it. The numbers show that right now they are not.”
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