The average unemployment rate since Stats NZ started compiling it in 1986 has been 5.5 per cent - roughly in line with where economists expect it to peak in this economic cycle.
Over the year, the seasonally adjusted unemployment rate rose 0.9 percentage points, up from 3.4 per cent in the March 2023 quarter.
The underutilisation rate, a broader measure of spare labour capacity than unemployment alone, was 11.2 per cent in the March 2024 quarter.
That compared with 10.7 per cent last quarter, and 9.1 per cent last year.
“Underutilisation not only includes people who are unemployed but also part-timers who want and are available for more work, as well as people who want jobs but were either unavailable to start work or were not actively seeking,” labour market manager Deb Brunning said.
Over the year, unemployment rose 31,000 while total underutilisation rose 75,000.
Increasing unemployment and underutilisation among young people (aged 15 to 24 years) comprised over half the national increase in each of these measures of spare labour capacity. Annually, youth unemployment rose 21,000 and youth underutilisation rose 44,100.
“There’s only one way to characterise the labour market report, and that’s weak,” said KiwiBank chief economist Jarrod Kerr. “People are stepping out of the market. Because demand for workers is waning.”
Employment contracted 0.2 per cent over the quarter, taking annual employment growth to just 1.2 per cent, down from 2.7 per cent. The working-age population, however, grew 3.1 per cent, Kerr said.
“The labour force is struggling to absorb the rapid increases in population, due to the surge in migration.”
The labour market was easing and doing so relatively quickly, said BNZ head of research Stephen Toplis.
“Cumulatively, only 6000 new jobs (net) have been created over the last three quarters and this is all attributable to the jump in the December quarter, which may well be election-related,” he said.
The 6000 decline in the first quarter was possibly as much a correction from the December jump as anything else but was still suggestive of a slump in demand for new hiring, he said.
“Some headline writers have concluded the data reflects the layoffs that are occurring in the state sector. It is true hiring of government employees seemed to stall from late last year onwards, but we think the ‘re-sizing’ won’t really show up properly until we see the [second- and third-quarter] data.”
Meanwhile, movements in employment by age group provided some interesting observations, he said.
“It would appear the strong run-up in youth employment we saw in 2021/22, when the supply of labour was limited, is reversing.”
Youth (15-19 years old) employment fell 4.5 per cent between March 2023 and March 2024.
“To the extent this represents youth furthering their education this is probably a good thing. To the extent it is affecting the incomes of struggling households, it may be problematic.”
Toplis argues that BNZ’s view of the labour market is, and has been, weaker than the Reserve Bank’s (RBNZ).
“The bank has the unemployment rate peaking at 5.1 per cent. This quarter’s unemployment reading was 0.1 per cent higher than the RBNZ’s 4.2 per cent,” he said.
“While relatively insignificant, we think this deviation is a sign of things to come. This will keep the pressure on the RBNZ to ease a little sooner than the [second quarter of 2025] as its February MPS intimates.”
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
If you have a burning question about the quirks or intricacies of economics, send it to liam.dann@nzherald.co.nz ... or leave a message in the comments section. He’ll try to answer in Inside Economics, a new column published every Wednesday.
