NZ employment confidence hits 22-year low, backs belief that unemployment will rise
Tuesday, 23 June 2026
While business is striving to overcome low confidence, job seekers are having their own battle with the blues, with a reading of employment confidence out this morning hitting lows not seen since 2004.
The Westpac-McDermott Miller Employment Confidence Index (ECI) fell by 12.5 points to 83.1 in the June quarter - the lowest reading for the survey since it began 22 years ago.
The loss of confidence was shared across all of the survey measures, “and was seen across most regions, ages and income groups”, said Michael Gordon, senior economist at Westpac.
Interviews were conducted in early June with 1550 people, and the margin of error of the survey is 2.5%. The survey asks about households’ perceptions of current and future job opportunities, their own actual and expected earnings, and expected changes in their own job security.
Read more:
Three things struggling hospitality industry wants from the next Govt
Fonterra to lose roles as part of a broader shakeup, Air NZ also jettisoning jobs
The report authors note the last survey, with a more upbeat finding of 95.6 points, happened in early March, at the beginning of the Iran conflict and likely before households had recognised the consequences (before fuel prices had surged).
Similarly, the latest survey was held in early June, just before the US-Iran peace deal and the largest of the recent declines in fuel prices.
That said, some 60% of respondents said they felt it was hard to find a job at the moment - a measure the report author said had been a useful leading indicator of near-term unemployment.
Currently, unemployment sits at 5.3%.
“The latest reading is consistent with our forecast of renewed softness in the jobs market in the coming months, with the unemployment rate expected to reach a cyclical peak of 5.6% by the end of the year,” said Gordon.
Households were also picking a downbeat medium-term outlook, with expected job opportunities in a year’s time falling to a net -30%, close to the record lows seen during the 2008 Global Financial Crisis.
The Middle East conflict has played a part in dampening sentiment, with NZIER’s Quarterly Survey of Business Opinion in February and March reflecting a sharp pullback in hiring intentions. A later survey by the ANZ, its monthly Business Outlook, showed hiring intentions slightly revived as hostilities in the Middle East cooled.
Earnings
Just 3% of households reported a rise in their earnings over the last year, from 14% reporting the same in March. The current reading comes close to the record low seen during the Covid lockdown.
Only about 12% of households expected a lift in their earnings in the year ahead –the lowest reading in the history of the survey.
“The sharp fall in expected earnings suggests that workers are not confident about being able to extract cost-of-living pay increases in the face of the sharp rise in fuel prices. The existing degree of slack in the labour market means there is less bargaining power for workers,” Gordon said.
Employment confidence fell especially hard in the North Island, in keeping with recent economic data showing strong primary industry exports is helping provide a buffer to the South Island.
However, the survey recorded a relatively large drop in employment confidence in Otago - not at the level of Auckland, Waikato and Gisborne/ Hawke’s Bay regions - but still worse than previous readings, as “the outlook for international tourism and hospitality exports has darkened in recent months”.
Employers more confident?
In contrast to confidence levels expressed by job seekers, or prospective job seekers, in the Westpac-McDermott survey, Employment Hero’s May Jobs Report, drawn from payroll data from established SMEs, showed businesses are expanding, particularly in select industries, but slowly, and with a persistent shift towards flexible labour.
About a third of New Zealanders are employed in SMEs, and the sector tends to feel economic currents before larger businesses.
Employment Hero’s May Jobs Report showed employment in New Zealand’s SME ecosystem had grown by 0.5 per cent month-on-month, as it had in months prior, painting the picture of a positive longer-term trend, and suggesting employers were backing themselves even as the broader economic outlook weakens.
But pay was still being constrained. While wage growth had ticked up 0.5%, longer-term there was zero year-on-year growth recorded and even May’s figure was a 13-month low.
When set against rising living costs, employees are effectively going backwards in real terms, albeit SME wage growth is keeping pace with inflation in the likes of the agriculture, mining, science and technology, and manufacturing and logistics sectors.
NZIER has predicted small and medium-sized businesses will continue to face the dual challenge of rising operational costs and softening customer demand for the remainder of 2026 and into 2027.