The unemployment rate rose 0.6 percentage points over the year, up from 3.4 per cent in the December 2022 quarter.
“Unemployment rates have returned to 2019 levels, following recent historic lows,” Work and Wellbeing Statistics senior manager Becky Collett said.
“Low unemployment formed part of the unique economic period from 2021 to 2022, as restricted borders limited increases to labour supply and labour demand remained high.”
The number of unemployed people rose to 122,000 (up 3000).
In the minutes following the release, the New Zealand dollar rallied to US60.91c from US60.79c. In interest rates, the two-year swap rate jumped to 4.93 per cent from 4.89 per cent.
The labour cost index (LCI) salary and wage rates (including overtime) increased 4.3 per cent in the year to the December 2023 quarter. This increase was the same annual percentage change recorded by the LCI in the March, June, and September 2023 quarters.
Average ordinary time hourly earnings, as measured in the Quarterly Employment Survey (QES), increased by 6.9 per cent over the year to reach $40.84.
Average weekly earnings (including overtime) for fulltime equivalent employees (FTEs) in the QES also increased – up 6.1 per cent over the year to the December 2023 quarter to reach $1588.
There is a very strong migration impact, Kiwibank’s Kerr said.
“The working age population rose the most ever recorded (back to 1986), and employment growth can’t keep up,” he said.
The seasonally adjusted employment rate was 69.0 per cent, compared with 69.2 per cent last quarter.
“It’s not just about today’s old data, that lags the economy. It’s about momentum, and the outlook for employment into 2025,” Kerr said.
“The economy is smaller than the RBNZ had forecast in November, and employment growth is likely to stall. The unemployment rate is forecast to break above 5 per cent this year, as employers ‘rightsize’ their businesses. It is by RBNZ design. And we’re likely to see a softening in wage pressure (and inflation).”
For men, the unemployment rate was 3.7 per cent, compared with 3.8 per cent last quarter. For women, the unemployment rate was 4.3 per cent, compared with 4.1 per cent last quarter.
Employers and Manufacturers Association (EMA) Head of Advocacy Alan McDonald said that while this was better than expected, he suspected the picture is now worse than the statistics showed.
“These numbers are from the last three months of 2023. We know anecdotally that the economic situation has further deteriorated, and the real unemployment rate today is likely to be higher,” he said.
“We are increasingly hearing from our members that the economic environment is becoming more and more difficult as increasing costs and rising interest rates are not only impacting consumer discretionary spending but also increasing business financing costs.”
That had been reflected through a growing number of requests for help that the EMA was receiving from members, who were being forced to look at their staffing, he said.
“Our AdviceLine, which provides specialist employment advice to our members, has seen the number of calls for restructuring and redundancy support surge by nearly 90 per cent compared with this time last year.”
“Our team were dealing with more than two calls a day in January from businesses who were considering redundancy and restructuring, which is deeply concerning given the start of the year tends to be one of the quieter months.
It was important to remember that rising unemployment reflected business owners who were struggling and were having to let people go or to close, he said.
Liam Dann is Business Editor at Large for the New Zealand Herald. He is a senior writer and columnist as well as presenting and producing videos and podcasts. He joined the Herald in 2003.
