Only small rise in unemployment, but more settling for part-time work

Wednesday, 7 May 2025

The number of New Zealanders classed as officially unemployed rose by only about 500, to total just over 156,000 people in the three months to the end of March, Stats NZ has reported.

The increase was not enough to shift the headline unemployment rate, which remains at 5.1%.

The Reserve Bank and ASB had expected unemployment to come in at 5.2%, but other bank economists had been more pessimistic, expecting an increase to 5.3%.

The better-than-expected figures were at least partly explained by some people stopping looking for work or switching from full-time to part-time work.

The labour force “under-utilisation” rate, which is a broader measure of the unemployed and which also includes people who would like to work more hours than they do, rose by about 6000 people to account for 12.3% of the population, from the rate of 12.1% in the previous quarter.

That is a 4½ year high.

Nevertheless, the labour-market figures appear more robust than expected and come on top of a higher-than-expected increase in inflation in the quarter.

Inflation was last measured at 2.6%, after adjusting for an error by Stats NZ in the official inflation figure which it has chosen to still report at an uncorrected 2.5%.

The total number of people in work rose by about 2000 from the previous quarter.

Stats NZ doesn’t provide exact numbers because the figures are based on a survey and it does not want to mislead people into thinking they are precise.

A comfort for the Reserve Bank, if not for workers, may be that average private-sector ordinary-time hourly wages rose by only 3.8% over the year, down from the 4% annual rise measured in the December quarter.

The Reserve Bank had expected that figure to be 4.6%, while ANZ had expected a 4.3% increase.

Council of Trade Unions economist Craig Renney agreed the headline unemployment figures were not as bad as forecast, but said they masked “real weaknesses”.

“There are 37,000 more people unemployed than at the election. The Māori unemployment rate, in particular, is very high at 10.5%.

“Pasifika unemployment is 10.8%. Unemployment in Auckland is 6.4%. Employment fell in manufacturing, construction, education and healthcare and there were nearly 3 million fewer hours worked in the economy than in the previous year,” he said.

Capital Economics senior economist Abhijit Surya agreed the details of the jobs report were “far from encouraging”.

“Hours worked” tended to be a good guide to underlying economic conditions and fell for a fifth consecutive quarter, to nearly 3% below last year’s level, he said.

“With wage growth continuing to fall rapidly, we’re comfortable in our view that the Reserve Bank will cut rates further than most expect.”

ASB senior economist Mark Smith, who was closest among bank economists to predicting the quarterly unemployment figure, expected the jobs market would remain soft for much of the year.

“Firms are likely to remain somewhat hesitant to take on new staff given the unsettled and uncertain economic outlook.”

The wage data reflected heightened competition for jobs, he said.

“We see further falls in wage pressures ahead.”

Westpac senior economist Michael Gordon said the implications for the Reserve Bank were mixed, with “slightly better employment figures” but a greater slowdown in wage growth than it had assumed in its February monetary policy statement.

ANZ senior economist Miles Workman noted public sector wage growth accelerated to 6.6%, which he described as “very much out of whack with the private sector and well ahead of inflation”.

However, the underlying details of the jobs update were “weak and disinflationary”, he also said.