Unemployment has gone to 5.1 percent, the highest level since 2020. (File photo). Photo: Supplied/ Kenny Eliason
- Unemployment rises to 5.1 percent, up from 4.8 percent
- 4000 jobs lost in Q4, 33,000 rise in the number of unemployed in 2024
- Annual wage growth slows to 3.3 percent from 3.8 percent
- Data in line with expectations, backs further RBNZ rate cut in two weeks
Unemployment has risen to a four-year high as the recession caused job losses, slowed hiring, and dented wage growth.
Stats NZ numbers showed the unemployment rate rose to 5.1 percent in the three months ended December 2024, from 4.8 percent in the previous quarter.
The rate was the highest since September 2020, and in line with expectations.
Unemployment has been steadily rising as businesses either sacked staff or stopped hiring because of the weak economy, even though a surge in migration had slowed sharply.
About 32,000 jobs were lost in 2024.
"This was the largest annual fall in employment since the year to the December 2009 quarter," Stats NZ labour market manager Deb Brunning said.
The level of underutilisation, a measure of slack in the jobs market, rose to 12.1 percent from 11.6 percent.
The largest loss in employment was for men because of large scale industrial layoffs.
"Men accounted for 85 percent of the annual decrease in employment, reflecting substantial falls in male dominated occupation groups of technicians and trade workers, and machinery operators and drivers," Brunning said.
Full time female unemployment rose to 5.2 percent, but Māori and Pacific unemployment rose markedly, to more than 9 percent.
The number leaving the labour force rose 24,700, reflecting younger people returning to studying, retirement, and giving up looking for work.
The broad measure of wages showed overall growth slowing to 3.3 percent, from 3.8 percent.
Private sector wages rose 3.0 percent annually - the lowest in four years, but public sector wages were up 4.56 percent, reflecting pay settlements.
The data was largely in line with Reserve Bank forecasts and is likely to support another 50 basis point cut in the official cash rate, to 3.75 percent, in two weeks.
Balance of power shifted
ASB senior economist Mark Smith said the numbers were close to expectations and showed weak economic activity catching up with the labour market.
"The balance of power is firmly in favour of employers with employment levels contracting and the economy losing a net 32,000 jobs over 2024," he said.
Smith expected demand for labour to continue to weaken until the second half of the year, with firms carefully managing employee headcount.
"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," he said.
Smith said a 50 basis point official cash rate (OCR) cut should be expected from the Reserve Bank this month, with the central bank then reverting to a "more measured pace" of rate cuts.
ASB forecast the OCR to hit 3.25 percent by mid-2025.
Westpac senior economist Michael Gordon said the number of people employed fell by 0.1 percent for the quarter, which was "slightly better" than Westpac's forecasts.
"The rise in the unemployment rate reflects the fact that while the level of unemployment has more or less flattened out, the working-age population has continued to grow in the meantime," he said.
Gordon said even with a recovering economy, it would likely be towards the end of the year before jobs growth would outpace population growth.
He said wage increases were also in line with expectations.
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