Economists are predicting an unemployment rate of 5.3% based on data due to be released today from Stats NZ’s Household Labour Force Survey.
That would be the highest rate since 2016, having risen from a record low of 3.2% in the post-Covid period when the economy was overheated and there were severe labour shortages.
However, employment numbers would likely improve from now on - although a lag could be expected, ANZ chief economist Sharon Zollner told Newstalk ZB’s Mike Hosking Breakfast.
“Given the economy is picking up, this should be around the peak.”
The peak, which she and other economists were estimating at 5.3%, was a historically low one.
Young people, Māori and Pasifika are typically worst affected during times of high unemployment, ANZ chief economist Sharon Zollner says. Photo / Corey Fleming
But that was “cold comfort” for those impacted – most likely to be young people, Māori and Pasifika, Zollner said.
“It’s certainly true that recessions are not felt equally.”
Westpac and ANZ economists are also picking 5.3%, the Herald reported this week.
The country’s “fragile economic recovery” was under way, ANZ senior economist Miles Workman said.
“But given the typical lags, the recovery will likely take a few quarters to be reflected in the unemployment rate.”
Other than Budget 2025, this is the last major piece of domestic data before the Reserve Bank’s Monetary Policy Statement, Workman said.
“However, it’s fair to say that changes to the RBNZ’s economic forecasts are likely to end up more meaningful for the monetary policy outlook than starting-point news.”
Economists at ASB see the unemployment rate landing slightly lower, at 5.2% for the quarter, and in line with the Reserve Bank’s most recent forecast.
It would still be the highest in just four-and-a-half years (unemployment peaked at 5.2% in late 2020 after the Covid shutdown recession).
ASB senior economist Mark Smith said he expected broadly unchanged employment levels, with modest increases in the labour force pushing the unemployment rate marginally higher.
“The unsettled and uncertain local and global scene and soft domestic demand are expected to contribute to subdued hiring over much of the year until strengthening domestic activity feeds through into more hiring.
“Low growth in the labour force will dampen the peak in the unemployment rate [in the low 5s for much of 2025], with the unemployment rate subsequently easing.”
Cherie Howie is an Auckland-based reporter who joined the Herald in 2011. She has been a journalist for more than 20 years and specialises in general news and features.
