New Zealand’s jobless rate has climbed to its highest level in more than a decade, increasing to 5.7% in the September quarter, with 174,000 people unemployed in July, August and September.
The last time the unemployment rate was at 5.7% was in the September 2015 quarter.
This latest unemployment figure, released by Statistics New Zealand on Wednesday, comes after New Zealand’s jobless rate rose to 5.6% in the June quarter. Seasonally adjusted, about 171,000 people were unemployed in April, May and June.
Of the 169,100 people who were unemployed in the September quarter – not seasonally adjusted – 21.5% had been unemployed for more than a year. In the previous quarter, this was 19%.
The latest unemployment rate was above the projections made by the Reserve Bank (RBNZ) and by bank economists.
In the lead up to Stats NZ’s labour market data release, bank economists from ANZ and BNZ were projecting the jobless rate to sit at 5.6% in the September quarter, Westpac and ASB projected 5.5%, while Kiwibank projected 5.4%.
Meanwhile, the RBNZ, in its September Monetary Policy Statement (MPS) projected the jobless rate would decrease slightly in the September quarter to 5.5%. In its September MPS, the RBNZ said “the unemployment rate increased to 5.6 percent in the June 2026 quarter and is forecast to remain elevated at 5.5 percent at the end of 2026”.
“Second round demand effects from the Middle East conflict dampen growth and slow the rate of hiring (relative to population growth) in the near term. We expect the unemployment rate to decrease towards the end of the projection, in line with the recovering output gap,” the RBNZ said at the time.
The people who would like to do more work
The underutilisation rate remained at 13.8% - this is a broad measure of untapped labour market capacity and includes unemployed people, the potential labour force and people who are underemployed. To put more simply, it’s people who would like more work.
The last time the underutilisation rate was around this level was in the December 2013 quarter, when the rate was 14%.
In the September quarter, there were 438,000 underutilised people. When it comes to the total number of underutilised people, an estimated 174,000 were unemployed, while 151,000 were underemployed and 113,000 were in the potential labour force category.
Within the potential labour force category, available potential jobseekers were down 6400 to 88,400 and unavailable jobseekers increased 5000 to 25,000.
For men, the underutilisation rate was unchanged at 12.4%, while for women, this increased to 15.3%, from 15.2% in the last quarter.
In the September quarter, the underutilisation rate for Māori was 22.3% and 21.2% for Pacific peoples. This was followed by 12.7% for Asian peoples and 12.0% for Europeans. This data is not seasonally adjusted.
Underutilisation in the North Island jumped to 14.0% in the September quarter, up 1.4 percentage points from a year earlier. In the South Island, the underutilisation rate was 11.7%. These figures are not seasonally adjusted.
Meanwhile, young people (aged 15 to 24 years) who were not in employment, education or training (NEET) were 14.1% in the September quarter, up from 13.8% in the June quarter.
Employment and participation
Stats NZ labour market spokesperson Abby Johnston said in the September quarter, the level of employment remained similar to the June quarter, which was 66.7%.
The employment rate was 66.4% in the September quarter. This shows the seasonally adjusted number of employed people was sitting at 2,891,000 compared to 2,896,000 in the June quarter.
Johnston said even though employment was similar to last quarter, there were changes in how people were employed, with casual and fixed-term roles increasing over the year.
There was also a shift towards part-time employment over the quarter, Johnston said.
Changes in how people were employed in the September quarter
Most employed people are paid employees and work in permanent roles – in the September quarter, 91.3% of paid employees held permanent positions. This figure is not seasonally adjusted.
Over the year, the number of paid employees working in non-permanent casual or fixed-term roles grew.
Casual employees increased by 19,100 (19.5%) to 116,900, while fixed-term employees increased by 8100 (18.9%) to 50,900.
“Over the quarter, there was an increase in the proportion of people working part-time, which contributed to a decrease in both usual and actual hours worked.”
The seasonally adjusted number of people with part-time employment jumped by 15,000 while the number of people in full-time employment decreased by 17,000.
The participation rate (labour force participation is the proportion of working-age people who are engaged in the labour market through employment or unemployment) was 70.4%, compared to 70.6% in the June quarter.
Annual wage inflation increased 2.1%. Average weekly earnings for full-time employees rose 3.3% to $1743 from $1730. This broader measure includes pay gains from job changes, promotions, and extra hours. Hourly pay rose 2.9% to $44.86 from $44.62.
New Zealand had low rates of unemployment in 2021 and 2022. However, it saw a jump in December 2023, reaching 4.0% and then rising quite quickly to 5.1% by December 2024.
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