New Zealand’s unemployment rate has climbed to its highest level in more than a decade, underscoring the growing strain in the labour market as more people look for work than the economy is creating jobs. According to the latest data released by Stats NZ, the unemployment rate rose to 5.4 percent in the three months ended December, up from 5.3 percent in the previous quarter. This is the highest level recorded since March 2015.
The rise comes despite the addition of 15,000 jobs during the quarter – the strongest quarterly employment growth in two years. However, the increase in job seekers outpaced job creation, reflecting a labour market that remains under pressure amid a weak economic backdrop.
Stats NZ macroeconomic spokesperson Jason Attewell said the figures show greater participation in the labour force, even as conditions remain challenging.
“Over the quarter, we saw higher levels of engagement in the labour market as both employment and unemployment increased,” Attewell said.
More Job Seekers, Slower Economic Momentum
A total of 165,000 people were unemployed during the quarter, an increase of 4,000 compared with the previous three months and 10,000 more than a year earlier. Economists and the Reserve Bank of New Zealand (RBNZ) had expected weaker conditions, but the data proved worse than forecast.
Businesses have continued to either reduce staff or pause hiring as high interest rates, subdued consumer spending, and slowing economic growth weigh on confidence. At the same time, the workforce has continued to expand, even as migration growth eases, adding further pressure to the jobs market.
A broader measure of labour market slack – the underutilisation rate – remained steady at 13 percent. This figure includes unemployed people as well as those who are under-employed or available to work more hours. The rate is the highest since late 2020, highlighting ongoing spare capacity in the economy.
While employment rose during the quarter, New Zealand still has more than 30,000 fewer jobs than it did two years ago, reinforcing concerns about the durability of the recovery.
Youth Unemployment and Women’s Participation Rise
Youth unemployment continues to be a major concern. The unemployment rate for people aged 15 to 24 climbed to 16.5 percent, a level that economists warn could have long-term consequences if young people remain disconnected from work. The proportion of young people not in education, employment, or training fell slightly to 13.7 percent, offering some limited reassurance.
Stats NZ also noted a sharp increase in the number of women entering the labour force. Around 20,000 more women joined during the quarter, with many taking up part-time roles. This trend reflects both financial pressure on households and a desire for greater workforce participation, even as full-time opportunities remain constrained.
Regionally, unemployment was highest in Auckland, Wellington, and Waikato, where rates were close to 6 percent. All South Island regions recorded unemployment below 5 percent, suggesting a more resilient labour market outside the main population centres.
Wage Growth Slows Further
At the same time as unemployment rose, wage growth continued to lose momentum. The broad measure of wages showed annual growth slowing to around 2 percent, near a five-year low and down from 2.1 percent in the previous quarter. This compares with a 3.1 percent increase in consumer prices, meaning real wages are still falling for many workers.
The slowdown in wage growth reflects weaker demand for labour and reinforces expectations that inflation pressures will continue to ease.
What It Means for Interest Rates
The weaker-than-expected labour market data strengthens the case for the Reserve Bank to keep the official cash rate unchanged at 2.25 percent when it reviews policy later this month. While inflation remains above target, rising unemployment and slowing wage growth suggest the economy is cooling faster than anticipated.
For households and businesses, the figures paint a picture of an economy in transition – one where job security is less certain, wage growth is lagging, and financial pressures remain elevated.
As The Indian Weekender continues to track economic trends affecting migrant and multicultural communities, these labour market shifts will be closely watched for their impact on employment opportunities, household incomes, and long-term economic confidence.
FAQs
Q1: What is New Zealand’s current unemployment rate?
The unemployment rate is 5.4 percent, the highest level in more than 10 years.
Q2: How many people are unemployed?
About 165,000 people were unemployed in the December quarter.
Q3: Did employment increase at all?
Yes, employment rose by around 15,000 jobs during the quarter.
Q4: Which groups are most affected?
Youth unemployment is high at 16.5 percent, and more women have entered the labour force, often in part-time roles.
Q5: How does this affect interest rates?
The data supports expectations that the Reserve Bank will keep the official cash rate unchanged in the near term.
