
More than 32,000 New Zealanders lost their jobs last year as the Reserve Bank (RBNZ) crushed economic activity and forced runaway inflation back into its target band.
The unemployment rate hit 5.1% in the final quarter of 2024, its highest level since the covid lockdowns in 2020 and a period of migration-fueled economic growth in 2016. There are now 156,000 people looking for work, a 27% increase from a year ago and up 5% during the quarter.
A Stats NZ spokesperson said the annual drop in employment was the largest since 2009, when the Global Financial Crisis caused an international recession and job losses.
The weakness in the labour market has been driven by the RBNZ tightening monetary policy to reduce economic activity and bring down inflation. Unemployment hit a record low of 3.2% during 2022 as firms hired additional staff and raised prices to meet consumer demand.
High interest rates have reversed that trend, with households cutting back on spending to meet mortgage repayments, stabilising prices and forcing firms to cut staff.
While the headline unemployment rate has been rising, it has been moderated by workers leaving the labour force. The rate is calculated as a percentage of those available for work, not the overall working-age population.
The labour force participation rate dropped to 71% in December, down from a record high of 72.4% in 2023, while the employment rate fell to 67.4%, down from a peak of 69.8%.
Michael Gordon, a senior economist at Westpac NZ, said the fall in participation has absorbed much of the softness in the job market over the past year.
“Much of the current cycle in employment has been driven by young people, who were drawn into the workforce in 2021 and 2022 when the labour market was tight and migrant workers weren’t available. As those conditions have reversed, many of them are ending up back at school rather than continuing to look for work,” he said in a note.
Another broader measure of labour market strength is the underutilisation rate, which measures the proportion of the labour force that either has no job or not enough hours. It fell to a record low of 9.1% in 2022 but has risen to 12.1% as of December 2024.
Weakness in the job market has translated into slower wage growth. The labour cost index (LCI) showed worker pay increased by 3.3% in 2024, down from 4.3% the year prior, while average hourly earnings rose by 4.2% to $42.57 — compared to a 6.9% increase in 2023.
In a note prior to the release, Gordon said slower wage growth was “not exactly something to celebrate but it’s an unfortunately necessary step in breaking the cycle of domestically-generated inflation”.
And, in comments made shortly after the release, ASB senior economist Mark Smith said the labour market is expected to continue to soften given a subdued outlook for economic activity and likely cost cutting by firms struggling to rebuild "battered profitability".
"We do not expect to see discernible signs of improvement in hiring until well into 2025. A modest pick-up in hiring is then expected towards the end of this year, but we envisage that firms will carefully manage employee headcount given the uncertain and volatile outlook," he said.
"...The RBNZ will be wary of the wider economic, social, and labour market costs from keeping overly restrictive OCR [Official Cash Rate] settings for longer than is necessary. A front loaded pace of policy easing remains appropriate for now, with another 50bp OCR cut expected in February (to 3.75%). With the OCR moving much closer to neutral settings (likely to be in a 3 to 3.5% zone), the RBNZ will then slow the pace of adjustment, with the OCR hitting 3.25% by mid-year. The OCR outlook for 2025 is highly uncertain, with both upside and downside risks to the labour market and economy in general," Smith said.
159 Comments
This should surprise no one. Orr said he would manufacture a recession and this is part of it.
Unfortunately it will also reduce wage growth further eating in to our standard of living. Next cab off the rank to go is overseas travel, then the luxury of a second car....
Yeap when the rates went up I could afford it and there was some fat there, but even after rates for me doubled, the cost of living continued to increase eating up all my fat, at the same time extra income we were earning slowly dried up as money was suck out of the economy. Yes we got pay increases, but they have not nearly kept up with cost of living increases.
Basically if the rate for my refi is not lower than my last we will be in about of trouble, as we are still seeing cost of living increases continue in 2025, insurance, power, rates, food etc, but income increases not nearly matching it.
So in short, RBNZ needs to cut more than it thinks to take pressure of middle class home owners.
Try being a pensioner on a fixed in stone income, like my Insurances went up by over $1000 p/a I spent hours getting cost comparisons to try and negate this increase, Council Rates 20% increase, supermarkets well that's another story!! we saved for our retirement at between $9 & $13 per hour of income, we shed tears getting a car repair at $90 per hour and similar with a Plumber, jeepers it's tough I give you the tip!!!!
Pretty pleased with this forecast. My 5% unemployment rate was right as well if I claim (falsely) that I was estimating the actual figure rather than the seasonally adjusted one!
The number of people not in the active labour force has increased by around 90,000 in the last 2 years. This is suppressing the unemployment rate (same happens every recession btw). So, watch the employment rate figure this week. We have negative job growth of around -2% so employment numbers will definitely be falling. I would expect an employment rate of about 67.4% - down from 69.8% at the peak.
NZ's monetary settings have no effect on growth. Our problem is more structural. Specific problems being but not limited to an aging population, terrible taxation policy and terrible government expenditure policy.
Honestly the only thing holding the country together is the fact that Kiwi's seam to have an excellent work ethic.
NZ's monetary settings have no effect on growth.
You sure about that?
Our problem is more structural.
100% agree.
Specific problems being but not limited to ... terrible taxation policy and terrible government expenditure policy.
You missed 'terrible monetary policy', but otherwise ... BINGO !!!
Agreed, unfortunately. Low interest money wasn't growing our economy but inflating an asset bubble. Successive governments ignored the advice of the productivity comission (before it was abolished entirely), OECD and even their own tax working group on improving economic outcomes.
We have had a persistent problem as voters where we have elected governments with very weak economic policies in New Zealand.
No, can’t go lower as it’ll cause imported inflation. We just have to ride this one out, no sugar hit from Orr. Give it 10 years or so..we might come right. Lol. Welcome to NZ. A very unproductive country that is getting poorer and poorer. I’m off to Oz, like everyone else.
The dollar is essentially worthless, that's why it requires more and more tokens to purchase equivalent items.
In attempting to control only one side of inflation they effectively put the economy into a need to be rescued. By not including and promoting asset inflation, they've continuously mismanaged financial stability. Because of their blinkered approach and arrogance, they instead devise new policy that only increases the causes of inflation and financial instability.
Rinse and repeat. They're incompetent and negligent and have far more power and effect on the economy than they should.
Uhhh, no. If it were, with higher listings, slow sales, flat to falling prices, and less building, the unemployment rate would be a hell of a lot higher than 5%.
Hence a lot of the "solutions" to our economic woes put forward on interest, aren't actually going to have the effect people think. Otherwise, countries with DTIs, CGTs etc would be doing far better than they are.
Ummm…..
- economic confidence in this country always boosts from ‘the wealth effect’ of rising house prices, and it goes th EV other way when house prices are falling / stagnabt
- many SME’s and households borrow against their mortgage
Etc etc
So I think you are underestimating the influence of housing
RBNZ MPS November 24:
Recent weakness in economic activity is assumed to flow through to further weakness in labour market conditions, with the unemployment rate projected to increase further to a peak of 5.2 percent in the March 2025 quarter. The unemployment rate is then assumed to steadily decline in line with the forecast recovery in GDP growth.
Tried that, same outcome.
If someone leaves they reduce the demand for jobs, but also the need for jobs (as they aren't consuming services etc). On top of that a mass exodus reduces economic sentiment. So I would say people leaving increases the unemployment rate.
That's a much longer term effect than being made redundant and likely going on job seeker benefits, if they don't leave. So many people I know that have been made redundant or whose work dried up recently either have already left (about 80% for Aus) or are about to. And most of them are young people we reaaallly don't want to lose, much of them highly skilled and educated.
If they are unemployed, their contribution to overall economic activity is reduced though comparative to if they were employed.
That is to say, if they stayed, their contribution to economic activity is not proportionate to their "contribution" to the stats.
So we get better stats in both employment metrics and economic activity per capita when they leave.
And if they "make it" where they go, it's a win-win!
Wasn't there an article about how new immigrants replacing the ones that have left were also sending significant proportion of their wages back home so their spending in NZ would be less than the citizens who had stayed and were spending here. So immigrants replacing citizens leaving = less discretionary spending in NZ?
Yourpointis lost. Labour supported the public service to do a whole bunch of important projects, much of that was canned by National, even critical projects. Sure National could have trimmed some of the HR/Consultant/fluff jobs and still kept critical project going, but they threw the baby out with the bathwater. Businesses have followed through as they spotted a weak job market and decided to restructure and make a bunch of people redunandant, even if they are super profitable (BNZ and other banks are a good example of this, redundancies and no pay rises, just after announcing their biggest profits ever, claiming times are tough).
Labout did spend $70b on COVID recovery and response. But given National has said that's exactly what they would have done, you can't really blame them for it.
Agree, this is the sort of thing National should fix. But there's a whole bunch of throwing babies with bathwater, the ferries, a whole bunch of other infra projects, tonnes of government projects which have huge long term payoff or are critical fixes. Their slash and burn approach to throw every project out is costing us hugely in unemployment, loss of GDP and loss of capability in the public service.
All the stats have turned sharply the wrong way under National, no matter what anecdote you come up with, unfortunately.
Rookieinvestor,
Let's agree that the last government redefined the meaning of incompetence. Even before taking office, Luxon and Willis were telling us how bad a shape the economy was in, but their very first policy decision was to hand almost $3bn to property investors. Whatever the merits of the case might be, surely it should have been postponed until the economy was in better shape?
They have been in government for well over a year now and what have they actually done. Talk's cheap and Luxon is full of it. For my money, he's a failure as PM and Willis is out of her depth. I want them to succeed, not for me, but for my grandchildren, but I don't see it happening.
a lot of people made some good coin
Especially ones who benefited from low interest rates.
Reducing spending is the counter to unsustainable stimulus and if you plan to remove the stimulus it's necessary.
We were not tough on anything in the last coalition, murderers on home detention, ram raids, we were too soft. and now that someone wants to put their foot done on it people think we are being too harsh.
Public sector wage increases were 50% higher than the private sector, we rely on the government for everything, including getting us out of this mess.
Funny how Orr is blamed for getting us in the mess when it was actually Grant and Jacinda yet people blame Luxon for not doing enough to get us out.
Easily confused...NZ occasionally / frequently charges murderers with manslaughter & drug driving causing death to achieve convictions in our excessively lenient legal system.
https://www.rnz.co.nz/news/national/537323/waikato-woman-drove-high-on-…
https://www.nzherald.co.nz/rotorua-daily-post/news/drugged-rotorua-driv…
No one forced these people to take illegal drugs & drive while intoxicated
https://www.legislation.govt.nz/act/public/1961/0043/latest/DLM329302.h…
160Culpable homicide
(1)
Homicide may be either culpable or not culpable.
(2)
Homicide is culpable when it consists in the killing of any person—
(a)
by an unlawful act; or...
What would be murder in any other country is reduced to manslaughter in NZ. You can literally hunt down a complete stranger and beat him to death, and its considered "manslaughter" here. Sentenced to 11 months home detention - not even the full 12 months available.
https://www.stuff.co.nz/nz-news/360569193/they-were-sending-loved-ones-…
5 months home detention for this one who kicked a 65 year old man to death
https://www.nzherald.co.nz/nz/christchurch-teen-mark-nagel-who-killed-m…
But on the subject of rape, a 5 times serial rapist and sexual offender got 9 months home detention.
https://www.theguardian.com/world/2022/oct/20/nz-court-rejects-appeal-a…
Public sector wages run in different cycles to private, you can easily cherry pick unusual years. 50% higher is not representative of Labour's term. I know our negotiations under Labour were terrible.
"Since March 2018, wages in the public sector grew 24.5% compared to 20.3% private growth."
https://www.nzherald.co.nz/nz/public-sector-wages-grew-faster-than-priv…
The trend is not the net taxpayers friend
https://www.kiwiblog.co.nz/2024/08/no_wonder_we_are_in_deficit.html
Some of this is catchup for that long depressing period in the 2010s where getting a public sector deal that met inflation was like getting blood from a stone.
I suspect a lot of this recent burst is the pay equity deals. My group did not come under that, so our pay rises have fallen well behind those of our colleagues.
Who benefited from the low interest rates? The first home buyers who might now be in negative equity? The banks who were able to flood the economy with more debt?
Orr, his predecessors and monetary policy did get us into the mess. But it was ultimately the people buying into the wealth effect/illusion that has created the collective mess. It was the people demanding more.
What exactly is Luxon trying to get us out of?
Who benefited, a whole lot of people who sold their properties to FHB's at a 30% premium, the government that could borrow a whole lot of money for vanity projects.
What exactly is Luxon trying to get us out of?
A government that has massively borrowed beyond its means the past 4 years.
It's well known you're a die hard lefty supporter, so i'm not surprised by the comment.
I take you as a Kieran Mcnulty fan.
If i'm so boring then why comment?
if they cut the borrowing to zero the country would be in a far worse situation than it is now, as i said, there is momentum in the INSANE debt that was accumulated under labor. it will take a long time to make back the $60BILLION DEBT INCREASE over labors term, i would be surprised if it happened in NACT's term.
our best hope to to get more trade deals, i put my money on Luxon getting trade deals over Hipkins any day. who comes across as a better business man? or who has a track record in business?
Reminder that National said at the time and immediately after, basically they'd have done the same things but more and better.
Not that I thought it was a good idea for Robbo to give the RBNZ the go-ahead to pump the property market at the taxpayer's expense. That was weird. However, National were also pretty happy with the pumping of property...
Hey Rookie
Who benefited, a whole lot of people who sold their properties to FHB's at a 30% premium,
At least none of the bloody Spruikers / Investors who "never sell" benefited from this spike up, only pricks like me who time the market did....
I will tell you when the bottom is in so you can buy it.
Indeed, have a work mate who has been down for 2 weeks with it and is getting so pissed off about the situation its not funny (an extrovert that normally visits clients, but can barely get out of bed). Also a family member who got it first time last year, now appears to have long COVID and seems to be getting very depressed about it. Normally a high performer and very sporty.
Statistically the elderly die readily from falls resulting in broken neck-of-femur, and the following complications thereof, yet most get up and about daily without being in fear of the unknown taking them in this way. Fear naught, as you won't be around one day to be fearful.
The increase in unemployment is to be expected, and I am sure it is actually much higher as many job seekers are not registered anywhere just yet. My pick is that the true figure is around 7% at least..
it is the virtually collapse of the building industry which is largely to blame. As building slows, a myriad of trades have little or no work which has a knock on effect right through whole of society. The disasterous drop in house values further suppresses demand as new build houses cannot compete with second hand homes being sold next door.
The government and the Reserve Bank should take heed of the situation lest it turn into a fully fledged recession which will only makes things worse. The government drive to cut costs, meritorious as it is, may turn into an unstoppable cascade forming a bigger problem than the excesses that already exist.
A drop in interest rates can help, but as the effect takes a long time to be felt, it is useless in what is obviously a looming problem that is arriving soon in a suburb near to you.
The government drive to cut costs, meritorious as it is, may turn into an unstoppable cascade forming a bigger problem than the excesses that already exist.
Entirely expected when you look at the calibre of Luxon and Willis, and before them Ardern and Robertson. How about Treasury, who has been running them over the past 6 years? Then we have RBNZ and Orr. The 6 horsepeople of the apocalypse.
As much as I really can't warm to Statler and Waldorf, at least they can see things are munted and trying to get some projects going.
Not going to happen though is it?
Especially when land is reclassified as an investment and not consumption per central bank economist thinking, and the accompanied mantra that we're not making any more land.
It's likely that we need a real recession in asset inflation. Not likely to happen by choice when the systems, policies and beliefs are structured towards price growth.
The government and the Reserve Bank should take heed of the situation lest it turn into a fully fledged recession which will only makes things worse
The real estate market is to big for direct intervention, those who have made profits will act to secure as much as then can. (exactly as free market capitalism is meant to work)
If you accept that perhaps its perhaps overvalued, then I do not believe you can stop the tide of investment sellers until we get back to fair valuation? Certainly we are not seeing investors entering here to pick up bargains... I, as a potential investor, do not see easy gains from these levels, rental yields are horrible and capital gains questionable, and doubts over future taxation of these if not family home etc.
While some existing investors may simply hold and not mark to market, Many of these homeowners hold MOST of their retirement equity in their house and the quality of that retirement is dependent on a downsize sale being achieved before the equity evaporates. This is how real estate crashes occur. individuals following self interest (same as on the way up).
We live in interesting times.
Yip and a lot of boomers nearing end of life now and will pass over the next 10-20 years. That is a lot of real estate that either needs to be sold or put onto the rental market when vacated. Supply may not be an issue going forward unless we have another huge uptick of migration.
So we have rising unemployment, slowing inward migration, record levels of Kiwi's leaving, interest rates falling but may bottom out soon, risks of more inflation globally, loads of property coming on to the market and a tough economy that will take some time to recover. Sounds like the property market might be in for a bit more downside this year.
Yet the pricing of homes, the "value" of land, the introduction of new money into the economy via this model, has a massive impact on not only The Economy but on many individual's well-being and health.
The social engineering that we've discussed has a massive impact on many individuals ability to not only see the alternatives, but also to take right action towards an alternative.
How does one get out of the programming if they're unable to see it? And even if they can see it, where do they go for guidance and support, when the majority are in the same programming?
People will only see and recognise the folly of their programming if they're prepared or willing to see it. It's not really up to anyone else to do that for them.
The alternative becomes very problematic, because only the very committed will totally extracate themselves from the system, and instead will need to continue interacting with it.
There's some simple and easy first steps, stop being a consumerist, and get busy producing stuff (rather than waiting for someone else to incentivise it).
Yet we're here pointing out the folly of the programming, and we may not be fully conscious of our own programming.
It's the catch 22 that can create the psychological and emotional imbalances. One can see but may require assistance. It's not about doing it for them, but being able to provide the best environment and support for them to help themselves.
One must consume to produce, and depend on others to consume their production. One must be incentivised to consume your stuff, rather than someone else's. Then there's the level of one's conscience, producing stuff for the sake of producing, or providing real benefit that improves well-being, for both recipient and provider, and lessens the contribution to the "negative" aspects of the system.
:)
We don’t seem to be having the same problems in Christchurch?
Christchurch I see has been voted as the greatest city in New Zealand!!
Exactly what I have been saying for years.
This was from a research company Ipsos, which asked people from 8 places around the country how happy they were with their city and quality of life last year.
It doesn’t come as a surprise really, as we all know but some will not admit it, that Chch offers so much more than all the others for lifestyle living and continues to do so into the future.
Source? For overall quality of life, Dunedin > Wellington > Christchurch according to this survey:
https://www.qualityoflifeproject.govt.nz/wp-content/uploads/2025/02/Qua…
I relocated from Christchurch to Nelson late last year due to work and while Nelson is lovely and the fishing is better, Christchurch is far superior
We were there for 10 years and it was a fantastic place for our children to be teenagers (in their early twenty's now)
I worked in the CBD which was great so accessible and an easy commute I also found it vibrant and food options fantastic and Imo it will only continue to improve.
The housing stock in general is in great condition in CCH (earthquake repairs and refurbs)
We have been looking in Nelson for 4 months now and it's all a bit sad and the vendors are not yet meeting the market. The slope instability and flood issues putting a bit of a dent in our confidence for houses we may have otherwise purchased
Both the children are in Wellington, so I visit there regularly and that is a city in decline :( Sad for my husband to see as he grew up there and has such fond memories
I grew up and lived through to my 30s in Auckland and could never live there again (yes traffic and awful CBD) so feel I can confidently say Christchurch is far and away the best out of AKL, WLG, CHC.
Yep spent all yesterday driving all over the place in Tauranga, traffic was a bit heavier than normal. I suspect a few too the opportunity to extend their holiday but free flowing traffic no issues. Auckland is buggered all day long, seven days a week now the traffic down here doesn't even come close.
Nelson is a retirement capital, as well as being popular with foreign ex pats who come with a better currency. Give it time, the level of stock is surging currently so hopefully in 6months it will drop further for you, but there's a LOT of entitlement around that is slowly starting to meet the market at least.
Reserve Bank (RBNZ) crushed economic activity
What nonsense, if interest rate changes do anything then look at those that borrow. Did RBNZ force a single person to borrow? No. If we were all savers and refused to borrow then increased rates would spur on economic activity in the form of more spending.
When will this site, that claims to help people make financial decisions, work out that gambling with debt is just that, gambling. Instead of advocating gamblers be bailed out by the 'mean spirited' RBNZ in the form of lower interest rates, it could be highlighting that leverage works in both directions.
If we were all savers and refused to borrow then increased rates would spur on economic activity in the form of more spending.
Let's hear the logic behind that. If we were all savers we wouldn't be spending, we'd be accumulating more in saving from higher rates. (Which is of course nonsense, if there are no borrowers who is paying the interest that your scenario assumes to be accruing to savers? )
Not sure what's hard about it. If you have more income (from higher interest rates) then you have more available dollars to spend in the economy. Savers may defer spending this year but that means they have more to spend next year.
If we were all savers we wouldn't be spending
...speaking of logic, I both save and spend - they are not mutually exclusive.
Deposit takers are borrowers and as such would be paying the interest. No one said they had to lend it out again, nor within NZ if they did.
Does anyone have confidence that unemployment taps out at 5.1%?
We have an aging population. It’s well known that as you age you don’t consume as much. We also have a falling birth rate. Less consumers.
We are losing our best and brightest to a country nearby that requires no visa and has a culture very similar to ours making it desirable. These are the people that would create jobs and GDP growth.
The gig is up, no one wants to buy houses off each other for higher and higher prices. So where to from here?
TLDR: We have a lost decade here while mis allocated capital is repaid.
House prices continue to drop as long as young people think offshore offers a better package.
Most of our big businesses (Banks and Insurance) will shrink as there business was based around house prices going up.
They will shrink as their lending shrinks.
The where to from here is a lost decade as the mis-allocated capital has to be paid back or written off, The RBNMZ will do as much as possible to stop written off as this would hit the very banks needed to fund diversification into more productive lending.
But the Ma and Pa property holders will never be able to start innovative AI backed startups etc...
My predictions;
- Anyone who owns an export based business will probably do ok, think farmers growers makers producers (not paper pushers)
- Anything to do with development of land will struggle as existing stock will be cheaper then builds.
- STEM skills will desert NZ as the wages are all offshore, or will work remotely from here, so maybe payee tax etc but no corporate productivity taxable ( Think a contract Google employee based in QTown).
- NAct will fail to acknowledge the collapsing property scene until its too late ( though they probably cannot stop it anyway), they will try to blame low rates for the run up and losses... but the lack of available credit will kill NZ, its a doom loop, proerty credit taking out small SMEs.
- We will see the worst recession in NZ since the great depression.
- Interest rates alone will not be the problem, it will be collapsing asset prices , dismal yields (cashflow) failing even to meet low interest payments (yet alone repayment of capital).
- Lower NZD , higher prices for anything imported, think coffee petrol cars tvs computers anything electronic
- Remaining kiwis will move further and further online as bits are almost free.
- There will be a population move from cities to regions in NZ, not massive but it will not be towards cities, which will offer little.
- Our standards of living will fall, we become part of the poor pacific, just a little bit classier.
https://www.nzherald.co.nz/business/young-people-bear-the-brunt-youth-u…
Young people bear the brunt – youth unemployment hits 23%
Nothing to lose , off to Aussie.
Thats what happens when the minimum wage is set so high, and kicks in at 16 years of age, that it makes no sense to hire a young person with no skills or experience, when you can hire a newly arrived migrant with 10 years experience. The minimum wage increased 45% over the Labour years, and youth unemployment along with it. But that is intentional Labour policy - keep as many people as possible dependent on Govt welfare and handouts. They also know that those that aspire to something better will leave the country - thus eroding National's voter base.
In Australia, where the minimum wage doesnt apply until you are 21 years of age, youth unemployment is 9%
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