New Zealand’s seasonally adjusted unemployment rate was 5.2% in the June 2025 quarter, according to figures released by Stats NZ today.

This is the highest unemployment rate since 2020.

It compares with 5.1% in the March 2025 quarter and 4.7% in the June 2024 quarter.

It was slightly better than the 5.3% expected by the consensus of economists but in line with Reserve Bank forecasts.

There were 158,000 unemployed people (seasonally adjusted) in the June 2025 quarter, compared with 156,000 in the March 2025 quarter. Annually, unemployment rose by 16,000 people.

But the numbers for New Zealand’s largest city look much worse.

The unemployment rate in the Auckland region increased 1.5% annually, from 4.6% in the June 2024 quarter to 6.1% in the June 2025 quarter. Annually, the number of unemployed people in Auckland increased by 15,000.

Auckland had 23,100 fewer people in employment year-on-year, but its total labour force also fell.

“Labour market conditions have changed considerably in the last few years. Since the June 2022 quarter, the unemployment rate has risen by 1.9 percentage points,” labour market spokesman Jason Attewell said.

“The underutilisation rate has risen by 3.5 percentage points over the same period.”

The underutilisation rate was 12.8% in the June 2025 quarter, compared with 12.4% in the March 2025 quarter and 11.9% in the June 2024 quarter.

Underutilisation is a broad measure of untapped labour market capacity that includes unemployed and underemployed people, along with the potential labour force.

“A relatively sharp rise in the underutilisation rate suggests overall slack in the labour market has opened up a little more than the headline unemployment rate implies,” said ANZ senior economist Miles Workman.

The employment rate was 66.8% in the June 2025 quarter, compared with 67.1% in the March 2025 quarter and 68.3% in the June 2024 quarter.

“Wages continued to grow, although at a slower pace compared with June 2024,” Attewell said.

Annual wage inflation was 2.4%, compared with 4.3% in the June 2024 quarter, and average ordinary time hourly earnings were $43.39, up 4.5% (compared with a 5% rise in the June 2024 quarter).

ANZ market strategist David Croy said there was little market reaction, the New Zealand dollar remaining at around US59.02c in the minutes following the release.

“It [the data] was on the soft side, relative to where the Reserve Bank saw things,” he said, adding the release confirmed that there was slack in the labour market.

Fiannce Minister Nicola Willis noted that the unemployment rate landed lower than many had forecast, but that it was tracking slightly better than Treasury forecasts from last year.

“Treasury has been forecasting since prior to the last election that unemployment would peak around this time this year, and they had predicted that it would be at 5.4% now, whereas today’s print is 5.2%,” she said.

“Prior to the election, Treasury had forecasted that at this point in time, there would be 8000 more people unemployed than has actually turned out to be the case in these numbers.”

But BNZ head of research Stephen Toplis described the data as “unequivocally weak”.

“At face value, the movement in employment and the level of unemployment revealed a labour market that was not as weak as we had expected,” he said.

“But a look under the bonnet reveals a picture that is at least as soft as we had feared, and one which is certainly weaker than the Reserve Bank had expected when it put together its May Monetary Policy Statement.”

KiwiBank economists agreed.

“At first glance, today’s employment report looked a bit better than expected, but it wasn’t,” said senior economist Mary Jo Vergara.

“It’s the big drop in labour force participation that’s keeping a lid on the unemployment rate,” she said.

From (a downwardly revised) 70.7% to 70.5%, the participation rate had dropped to a four-year low.

“That in itself is a sign of a weak labour market. People are leaving the labour market because it is simply not as attractive as it once was,” she said.

In fact, the labour force shrank over the year.

“That doesn’t happen often,” she said. “The 0.4% decline is the deepest since March 2013.”

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.