Unemployment rate unchanged at 5.1%, full-time work declines

Wednesday, 7 May 2025

CTU economist Craig Renney discusses the latest unemployment numbers and wage data.

The unemployment rate has not budged from 5.1% in the first quarter of the year.

Economists widely predicted that unemployment rate would rise to a nine year high of 5.3% but Stats NZ’s Labour Market data for the March 2025 quarter showed this was not the case.

'Seasonally adjusted levels of unemployment remained at 156,000 between the December 2024 and March 2025 quarters,' Abby Johnston, Stats NZ's labour market spokesperson said.

However, the number of people in full-time work fell by 45,000 over the year, while the number of people in part-time work grew by 25,000, with approximately 21% of employed people working part-time.

The Household Labour Force Survey found that, among both full-time and part-time workers, 328,000 wanted to work more hours, up 11.9% compared to a year ago. According to Stats NZ, it was driven by those who said there was not enough work available.

It reflects the number of underutilised people at 390,000, compared with 384,000 in the previous quarter.

The data also shows that unemployment was higher than a year ago. The 156,000 people unemployed in the March quarter was up by 22,000 compared to the same quarter in 2024.

'While unemployment was unchanged over the quarter, longer-term trends mean the labour market appears quite different to the same quarter last year,' Johnston said.

The survey suggests that wage growth is slightly outpacing price inflation. Wages and salaries increased by 2.9% in the year to March, compared to consumer price inflation of 2.5% over the same period.

Wages in the public sector rose more than in the private sector. Private sector average hourly earnings increased 3.8% to $40.46, compared to a rise of 6.6% for the public sector, to $51.66.

ASB senior economist Mark Smith said he expected the labour market will remain soft for much of 2025.

“Overall employment levels are expected to remain flat until an economic recovery unfolds later this year. Firms are likely to remain somewhat hesitant to take on new staff given the unsettled and uncertain economic outlook,” he said.

Smith said labour cost growth was also expected to slow as inflation cools and as firms seek to contain the wage bill.

“More moderate 2025 increases in the minimum wage and sub 3% inflation should see private sector labour cost growth approach 2% by the end of 2025, consistent with core inflation settling close to the 1-3% CPI target midpoint.”