NZ unemployment climbs to near 9-year high of 5.3%, tough times to continue for jobseekers
Wednesday, 5 November 2025
Official unemployment rose to 5.3% in the three months to the end of September, with 160,000 people out of work, Stats NZ estimates.
Labour market spokesperson Jason Attewell noted unemployment had now been above 5% for a year, and many economists — including those at the Reserve Bank — are forecasting it may be another year before it drops down below that level.
The unemployment rate, which had previously been sitting at 5.2%, is the highest since the December quarter in 2016.
Jobs fell fastest over the past year in the construction, wholesale and real estate industries and the science sector, with the largest percentage rises in jobs in the electricity, gas, water and waste industry and the finance and insurance industry.
Of the officially unemployed, 22,700 had been looking for work for more than a year and the overall youth unemployment rate jumped to 15.2%, with 64,500 people aged between 15 and 24 now counted in the statistics.
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A small silver lining in the figures is that the under-utilisation rate — a broader measure of the labour market that for example includes people in part-time work who want to work full-time — rose at a slower pace than official unemployment, to 12.9%, from 12.8% in the June quarter.
The total number of people in work was 2,873,000, unchanged on the previous quarter.
While the Reserve Bank and many other economists believe unemployment has now peaked and will start to edge down in the current quarter, not all are convinced.
Westpac senior economist Michael Gordon had been tipping ahead of today’s announcement that it would reach 5.4% in the three months to the end of December.
His forecasts reflected the slower-than-expected economic recovery, he said.
“It'll take longer before we get to the point where jobs are outgrowing population growth.
“Given that the adult population is still growing, we need to do a bit better than flat jobs growth before we start to see the unemployment rate turn.”
Gordon and others are also not expecting unemployment to fall quickly from this year’s highs once it does retreat, meaning there could be many months of frustration still ahead for many job seekers.
“Even though we are forecasting something like 3% GDP growth for next year, that's not at all unusual,” he said.
“It did take quite a while into the slowdown before we saw outright job losses and I think we’re probably still finding a few businesses that are a bit overstaffed relative to how much activity is going on at the moment.”
That meant jobs growth was probably not going to feel like it had switched on suddenly, he said.
“We are seeing job ads pick up from where they were, but still at a very low level.”
The Reserve Bank was in August predicting that unemployment would still be at 5% in the September quarter next year and Gordon said Westpac’s forecast would be similar.
ASB senior economist Mark Smith warned last week that there were “few catalysts on the horizon besides supportive monetary policy settings that will push employment concertedly higher”.
“The worst is behind us, but we don’t expect to see a meaningful lift in employment until 2026,” he said then.
The unemployment rate for men was 5.2% in the latest quarter, up from 5% previously, while for women it was 5.4%, down from 5.5% previously.
Significantly more women than men were in work but wanting more hours, with their respective under-utilisation rates 14.9% and 11.1% respectively.
Wages data also released today by Stats NZ showed average hourly earnings, including overtime, were up 3.9% over the year at $43.68 an hour.
That was the first time the rise in annual hourly-earnings had been below 4% since the December quarter in 2021.
The rise in official unemployment was in line with most forecasts and, combined with the slower wage growth, may reinforce expectations that the Reserve Bank will cut the Official Cash Rate by a further 25 basis points to 2.25% when it issues its next monetary policy statement on November 26.
ANZ senior economist Miles Workman said the figures were very much in line with the Reserve Bank’s expectations.
“That probably means they are going to feel pretty confident that they can deliver that 25 basis-point cut and then park things there as they wait over the summer to see how the data evolves,” he said.