Stats NZ: Unemployment hits 11-year high at 5.7%

New Zealand's labour market is cooling as job losses accumulate and worker participation declines. Stats NZ released data on Wednesday showing the unemployment rate climbed to 5.7% in the quarter ending September, up from 5.6% in the previous three months.

This marks the highest unemployment level in nearly 11 years. The number of unemployed people reached 174,000, an increase of 3,000 from the prior quarter and 14,000 higher than a year ago. The figures came in worse than most economists had forecast.

The total number of employed individuals dropped by approximately 4,000 during the quarter, although the workforce remains 19,000 larger than it was at this time last year. Abby Johnston, the Labour Party's labour market spokesperson, noted that while total employment levels held steady quarter-on-quarter, the nature of work has shifted. She stated that casual and fixed-term roles increased over the past year, with a distinct move toward part-time arrangements in the most recent quarter.

Casual employment rose by nearly 20% year-on-year, while fixed-term jobs grew by 19%. The data indicates a rising proportion of long-term unemployment. Those out of work for a year or more now account for 21.5% of all unemployed individuals, the highest share recorded since mid-1994. Youth unemployment, defined as those aged 15 to 24 who are not in education or training, also ticked up from 13.8% to 14.1%.

Regional disparities persist, with Northland reporting the highest unemployment rate at 8.3%. Auckland, Waikato, and Manawatu-Whanganui all recorded rates above 6%. In contrast, most regions on the South Island remained below the 5% threshold. The broader underutilisation rate, which includes under-employed workers, stayed at 13.8%, a 12-year high. The labour force shrank by 1,000 people in the quarter, while the participation rate fell slightly.

Wage growth remains subdued. Overall wage growth sat near a five-year low at 2.1%. An alternate measure showed take-home pay rising by 3.3% annually, a rate below the 3.7% inflation rate. Stats NZ observed a drop in total hours worked, attributing part of the decline to an increase in employees citing holiday reasons for reduced hours. The Reserve Bank of New Zealand has maintained that slower wage growth is necessary to cool inflationary pressures.

The labour force stood at a level 34,000 higher than a year ago, despite the quarterly contraction. The working-age population increased, contributing to the slight dip in the participation rate. These figures confirm a trend of cautious hiring by businesses facing weak demand and rising costs, resulting in a jobs market that has struggled to expand despite a growing population.