Unemployment hit its highest level in more than four years. Photo / 123rf
Unemployment rose in the last quarter of 2024 to 5.1%, up from 4.8% in the September quarter.
Annually, unemployment rose by 33,000 to 156,000, as measured by the Household Labour Force Survey.
Stats NZ has released new data today about jobs and the pace of wage growth.
The results were broadly in line with market expectations, and with the Reserve Bank’s forecasts in its November Monetary Policy Statement, said Westpac senior economist Michael Gordon.
“Some of the details were marginally stronger than the RBNZ had assumed,” he said.
“None of this is likely to be persuasive; the RBNZ has already stated that the base case for its policy review later this month will be a 50bp OCR cut, unless there was conclusive evidence otherwise.”
The seasonally adjusted employment rate was 67.4% in the December 2024 quarter, down from 69% a year earlier, Stats NZ said.
That was the largest annual fall in employment since the year to the December 2009 quarter, Stats NZ labour market spokeswoman Deb Brunning said.
“The annual fall in the employment rate reflected 32,000 fewer employed people over the past year,” Brunning added.
“Men accounted for 85% of the annual decrease in employment, reflecting substantial falls in the male-dominated occupation groups of technicians and trades workers, and machinery operators and drivers.”
As the Herald reported yesterday, massive layoffs over the past year have added to the pool of job seekers, according to 93% of New Zealand recruiters surveyed by JobAdder.
“Unemployment has been increasing since late 2022,” Brunning said.
“The unemployment rate in the December 2024 quarter was the highest it’s been since the September 2020 quarter, when it was 5.2%.”
Stats NZ said within the overall decrease in seasonally-adjusted employment for men, there was also a shift from full-time to part-time work.
While the number of men in full-time employment fell by 36,000 annually, the number in part-time employment grew by 9000.
And, over the year, the number of women in full-time employment fell by 5000, but there was little change in women’s part-time employment.
The labour market was expected to continue to soften given a subdued outlook for economic activity and likely cost-cutting by firms struggling to rebuild battered profitability, said ASB senior economist Mark Smith.
“We do not expect to see discernible signs of improvement in hiring until well into 2025,” he said.
“A modest pick-up in hiring is then expected towards the end of this year, but we envisage that firms will carefully manage employee headcount given the uncertain and volatile outlook.”
Slowing growth in the working-age population and a likely ‘discouraged worker effect’ would likely keep labour force growth low and keep the peak in the unemployment rate below 5.5% over the first half of 2025, with gradual declines from there, he said.
Those looking for signs of recovery may be disappointed as the labour market typically turns around more slowly than other parts of the economy.
Westpac senior economist Michael Gordon expected to see a continuation of the steady softening in New Zealand’s jobs market.
“We expect the unemployment rate to rise to 5%, compared to 4.8% in the September quarter,” he said.
“That’s a touch less than the 5.1% that we and the Reserve Bank had previously forecast, reflecting the fact that recent jobs data has been slightly better than expected.”
The September quarter data showed a falling labour market participation rate was softening the impact of job losses.
ASB senior economist Mark Smith said correctly picking labour market outturns often required some luck “given the many moving parts and statistical vagaries of the figures”.
“But we have landed with fourth-quarter figures close to the RBNZ view,” he said.
“The protracted economic slowdown looks to have caught up with the labour market, with the figures expected to show further cooling.”
Low growth in the labour force would dampen the peak in the unemployment rate (at about 5.2% in the first half of 2025), with the rate subsequently easing, Smith said.
“With inflation close to the target midpoint and monetary settings still slowing the economy, further swift monetary easing looks appropriate to limit economic and labour market scarring.
“We expect another 50 basis point OCR cut in February (to 3.75%), with the RBNZ to then revert to a more measured pace of easing, and with the OCR hitting 3.25% by mid-2025,” he said.
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.