“More than 70% of the 32,000 net jobs lost over 2024 were for those aged 15 to 24,” he said.
The unemployment rate would be even higher if it weren’t for the fact that youth participation is dropping rapidly, BNZ head of research Stephen Toplis said.
“Youth are often the ‘marginal’ employees, so when economies soften the youth unemployment rate tends to rise faster than that for other age groups,” he said.
“It is no different this time around. The redeeming feature is that many youth do at least have the option of returning to school or higher education to enhance their future employability. The drop in participation for this age group suggests many may be doing this.”
The topline unemployment – rising from 4.8% to 5.1% – was largely expected by economists and was in line with Reserve Bank forecasts.
“Some of the details were marginally stronger than the RBNZ had assumed,” Westpac senior economist Michael Gordon 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 50 basis point 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,” she added.
The figures also reveal males have been hit much harder than females in the past year.
“Men accounted for 85% of the annual decrease in employment,” Brunning said.
“That reflected 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 jobseekers, 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%.”
Within the overall decrease in employment for men, there was also a shift from fulltime to part-time work.
This shift in the “quality of work” was another sign of weak labour demand, Kiwibank senior economist Mary Jo Vergara said.
“Even prior to the decline in employment, hours worked were already on the chopping block.”
The fulltime workforce shrank 1.7% in 2024.
Meanwhile, the part-time workforce expanded 1.5% over the year as 9000 men took up part-time work.
“Needless to say, the cutback in fulltime employment was a key influence in the decline in total hours worked,” Vergara said.
Over the year, the number of women in fulltime employment fell by 5000, but there was little change in women’s part-time employment.
The labour market was expected to continue to soften with the outlook for economic activity still subdued, ASB’s Smith said, and it was likely there would be further cost-cutting by firms struggling to rebuild battered profitability.
“We do not expect to see discernible signs of improvement in hiring until well into 2025.
“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.”
But with the immigration rate falling and slowing growth in the working-age population, as well as a “discouraged worker effect” the peak in the unemployment rate would likely stay below 5.5% over the first half of 2025, he said.
From there, he expected to see gradual declines as the economic recovery flowed through to the jobs market.
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.
