"[Workers] are disillusioned. Basically, in Wanganui, there isn't that much work around."
Many workers were limited to offers of casual and fixed-term contract work, he said.
Wanganui's labour force participation rate - the percentage of unemployed and employed people in the working-age population - was down 3.2 per cent to 59.1 per cent in the three months to December.
Nationally, the unemployment rate dropped to 6.9 per cent. That was down from a 13-year high of 7.3 per cent in the September quarter, according to Stats NZ.
The employment rate fell 0.8 per cent for the December quarter, to 62.6 per cent.
A breakdown showed the fall was due to a 6 per cent decline in part-time employment. Full-time employment rose slightly (0.4 per cent).
Westpac economists called the survey an "oddball assessment" of the labour market.
"Our assessment of the labour market has not really changed - it is still weak, but we do not believe that it has suddenly got sharply better or worse."
Year-on-year figures showed the total number of Kiwi jobs fell 1.4 per cent in the 12 months to December. This was led by a 19 per cent plunge in self-employment.
Otago had the lowest unemployment rate across the regions at 4.3 per cent, with Southland at 4.6 per cent and Canterbury at 4.9 per cent. Auckland's rate improved to 7.2 per cent, while Wellington's rose to 7.9 per cent.
Northland had the highest rate at 9.5 per cent. APNZ
