The unemployment rate hit 5.3% in the September 2025 quarter, according to figures released by Stats NZ today.
That is the highest rate since December 2016 (up from 5.2%).
There were 160,000 unemployed people in the September 2025 quarter, as measured by the Household Labour Force Survey.
The increase is in line with what economists had expected.
Despite the grim numbers economists said there were promising signs in today’s data.
The figures below the topline confirmed “signs of stabilisation”, said ASB senior economist Mark Smith.
The majority of economists had forecast the topline unemployment rate to land at 5.3% (up from 5.2% in the June quarter).
“Labour market conditions look to be stabilising,” he said. “The worst is behind us, but we don’t expect to see a meaningful lift in employment until 2026.”
“Chunky increases in hours worked and rising full-time employment and QES filled jobs/paid hours point to strengthening employment demand.”
Westpac senior economist Michael Gordon said the September quarter data was subdued as expected.
Gordon also pointed to the 0.9% rise in the hours worked in the Household Labour Force Survey - the first quarterly increase since December 2023.
“Average hours worked had fallen markedly over the last year or so, implying that employers were adjusting to the soft economy by reducing hours rather than laying off workers; the latest quarterly result suggests that this trend is reversing.”
Gordon said the September quarter results were in line with the Reserve Bank’s forecasts offering little for markets to chew on ahead of the next Monetary Policy Statement on November 26.
“There are some early signs of the economy stabilising, but the existing degree of spare capacity will give the RBNZ confidence that inflation will moderate back towards the 2% target midpoint next year,” he said.
“We continue to expect a 25bp cut in November.”
The unemployment rate for young people experienced a significant increase over the year, Stats NZ said.
The unemployment rate in the 15–24 age group increased to 15.2%, from 13.1% a year earlier.
The proportion of youth aged 15 to 24 years not in employment, education, or training (NEET) rose to 13.8% in the September 2025 quarter, up 1.4 percentage points annually.
The NEET rate gives a more detailed picture of labour market engagement for young people, Stats NZ said.
The underutilisation rate was 12.9% in the September 2025 quarter, compared with 12.8% in the June 2025 quarter.
Underutilisation includes unemployed and underemployed people, along with the potential labour force.
It measures those who have some work but say they need more.
There were 138,000 underemployed people in the labour force in the September 2025 quarter, compared with 121,000 in the September 2024 quarter, Stats NZ said.
Underemployment is defined as part-time workers who have both the desire and availability to work more hours.
“Around two-thirds of those underemployed in the September 2025 quarter were women, reflecting the higher number of women who work part-time,” Attewell said.
While underemployment predominantly affects women, men working part-time were more likely to be underemployed.
Approximately one in four men working part-time were underemployed, compared with one in five women working part-time
The employment rate was 66.6% in the September 2025 quarter, compared with 66.8% in the June 2025 quarter.
In the September 2025 quarter, the number of employed people was 2,873,000, compared with 2,891,000 in the September 2024 quarter.
“Better signs are ahead,” said ASB’s Smith.
“The unfolding economic recovery should see excess labour capacity gradually erode with the unemployment rate moving towards the 4% to 4.5% Goldilocks zone by the end of next year.”
Liam Dann is business editor-at-large for the NZ Herald. He is a senior writer and columnist and presents and produces videos and podcasts. He joined the Herald in 2003.