February 3, 2026 • 11 mins
Unemployment's risen again to a ten-year high, with 165 thousand Kiwis currently out of work.
Stats NZ data shows the unemployment rate was 5.4% in the December quarter, up from 5.3% in the September quarter.
It's now the highest it's been since September 2015.
The Herald's Liam Dann told Kerre Woodham while today's rise is small, it's also unexpected.
He says there was some hope we had seen the peak of unemployment, but it appears we haven’t.
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Speaker 1 (00:09):
You're listening to a podcast from News Talk sed be
follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
The unemployment rate has arisen to five point four percent,
the highest since September twenty fifteen. New Zealand Herald Business
editor at largely and Dan joined me, now I believe.
So what do we make of this? When I announced
when I read out the news, my caller Troy went,
(00:37):
that's not great in an election.
Speaker 1 (00:38):
Yet that's some very good analysis.
Speaker 2 (00:42):
I mean, we should have stuck with Troy, do you.
Speaker 1 (00:44):
Think, well, I think the numbers. We hope the number
goes down, not up, and it's gone up, so that's
a good starting point. Economists had thought it would sort
of hold steady at five point three. I think asb
thought it might go down. So there was some hope
that we were we had seen the peak of unemployment,
and it appears we haven't. I mean, I was talking
(01:05):
to an economist last night who said, look in the ground,
scheme five point two, five point three, five point four,
all of those are possible and probably don't change what's
happening in the economy that much. But as a political story,
it's not going to be a good day for the government.
I wouldn't think just because you know, it's it's so
(01:27):
sort of I mean, it's an emotional thing. It's a
big thing, unemployment and the worst in ten years. This
is a government that came in was certainly in opposition.
They talked a lot about jobs and what hadn't gone
well with the previous government. What we're seeing is that
the employment creation in the December quarter just was really flat.
(01:52):
There was a tiny little bit of employment growth, so
that not many jobs new jobs were created. What's made
the difference is for the past few quarters, the participation
rate has fallen, so fewer people have been engaging with
the workforce because they've been going into further training or
things like that, staying in school, and that didn't happen
(02:15):
this time. More people, the size of the labor force
has actually grown and more people are engaging in the
labor market so are available to be classified as employed
or unemployed, and that's lifted the numbers of unemployed. I think,
so it is you know, it is fairly technical, but
you know that's one hundred and sixty five thousand unemployed
(02:37):
New Zealanders and it's a quarterly increase of five thousand people.
So it's a it's a real thing.
Speaker 2 (02:44):
I was just going to say, you know, there'll be
people saying, what's the difference really between three five point four.
The difference is families who are going to struggle to
pay rental mortgage.
Speaker 1 (02:55):
Yeah, oh absolutely, at a personal level that that's very real.
It's also you know, and when we look at step
back and look at the economic story and the recovery,
it's it's sort of like a timing thing. It's just
it suggests that it's taking a bit longer for the
you know, the jobs market to turn around, or it
may take a bit longer, and that's not great. We
(03:18):
know it's a sort of lagging indicator and it takes
longer for unemployment to recover, but it means that we
might not be seeing a recovery and that that part
of the economy, you know, the job, jobs, creation and
things until later in the year. And of course it
is election year, so it is going to be a
political football, I would imagine.
Speaker 2 (03:37):
Paul writes, could you ask mister Dan what the historic
average is for unemployment? He says five percent is helpful
for the economy. That means there's workers available but it
doesn't put excess pressure on higher wages, which will keep
inflation down.
Speaker 1 (03:51):
Yep. That is a way of looking at it, because
you know, the historic average I think is around five
point two five point three percent. I don't have the
exact number in front of me, but that includes some
periods of obviously lower and unemployment, and it this particular
survey goes back to nineteen eighty six and includes periods
(04:13):
like the early nineties when we got up into nine
point eight ten percent. So you know, so by historic
standards you might say, well, it's not terrible, but then
you've got to look at it in the context of
the world we live in now, and so we have
a lot more workers on contracts and working numerous part
(04:34):
time jobs, and they tend to feature in underutilization numbers,
which is to say, if you're a contract or you're
a small business person or something like that, you haven't
got enough work to survive on, you would be considered underutilized.
And that rate is about thirteen percent. So there are
a lot more people out there who have some work
(04:56):
but not enough than there are people who are completely unemployed,
which of course is categorized by stats n Z as
being no work at all. So if you have any
part time work, you're not unemployed, you fall into the
under utilization rate. And I think the world's changed a
bit since the eighties and nineties when everyone sort of
had a salaried or a wage job, you know, and
(05:21):
things were a lot more stable around that sort of thing.
So I think it is tough. The the point your
caller makes, your texture makes is relevant in terms of
where interest rates might go and the fact that there
may be more what economists call spare capacity in the
economy because of the higher unemployment rate. You know, it's
(05:43):
a trade off though, because you really don't want to
see people on the sort of unemployment scrap heat, particularly
long term. The youth unemployment rates are always much higher,
and some of the ethnicities re unemployment and things are
always much higher, So there are some social things there
where it's not good. You'd probably say, you know, the
(06:04):
economy can't cope when unemployment falls too low because it
does gener inflation, so that's built into the system. But
you know, we'd rather see it sort of four point
five something like that and the economy running at capacity.
We haven't got that much capacity in the economy we
might as well run run at it.
Speaker 2 (06:23):
Why don't we put out underutilized and unemployed at the
same time.
Speaker 1 (06:28):
Well, we do, it is there, It's just that we
just don't report it as well. Yeah, I mean it's
it's in the story that you know. I definitely definitely
do report it. But I guess the bigger motive figure,
the one that we all have grown up learning to understand,
you know, going right back, is unemployment. So that's the
one that grabs the headline.
Speaker 2 (06:47):
But yeah, I think I think we should do both henceforth. Yeah,
I think, well we announced both.
Speaker 1 (06:51):
It's true, although it can be very hard to fit
under utilization and unemployment as words into the Herald's headline template.
Speaker 2 (06:59):
But no, but where I can do that, So I
think I think that's what I'll do. Yeah, I think
I think it is worth that's a better measure of
the economy and what people are doing.
Speaker 1 (07:08):
Yeah, yeah, that's right. I think it reflects more accurately
the kind of workforce we actually have. It's not cut
and dried and black and white, and it's not a
situation where you know, people are totally employed or totally unemployed.
Most people where a lot of people are in that
middle category.
Speaker 2 (07:28):
And Bruce another text says, it does an unemployment go
up every December because kids are leaving school and university.
Speaker 1 (07:34):
Well, it does, but these are seasonally adjusted figures, so
stats n Z is aware of what the changes are
based on seasonal trends and factors those into the numbers,
so that hopefully, I mean, I'm sure there's some complicated
maths and some subjective calls they have to make, but
they should be accounting for that in the numbers. So
(07:56):
these are seasonally adjusted figures and they will capture things
like people all leaving school at once and that kind
of thing.
Speaker 2 (08:04):
Another textas says they're very engaged, are Texters? Yeah, listeners
very engaged. Could people be holding off on retirement due
to high inflation be contributing to higher unemployment.
Speaker 1 (08:16):
Yeah, that'll keep the participation rate up, but keep the
size of the you know, the labor force up, and
that can keep I guess you know, it means there
are fewer jobs available for people coming through. But you know,
as you say, it's it's a cost of living thing.
A lot of people are working longer because they have to.
(08:37):
And you know, look, look some people there is a
demographic thing where people are also probably working longer because
they are still you know, contributing and doing great things
in the workforce. And that's a choice, but it is
the demographics of it probably are playing a part in
the way that our unemployment figures are shaped these days.
Speaker 2 (08:56):
And another one says, what is unemployment? I'm forty one,
I don't have a job, but I live off my
managed funds. Do I have to declare I want a
job to be considered unemployed?
Speaker 1 (09:07):
Well, the this is or for survey. There are two
ways that could measure it. They you know, so presumably
you're not on a job seeker so you're not unemployed
by that measure. By this measure, if you were surveyed
and you were, yeah, you'd have to be actively looking
for a job, as the simple answer. So if you're
not looking for a job because you're doing okay, living
off the living off your savings and things, then you
(09:28):
wouldn't classify as being engaged in the workforce. So yeah,
it's a it's it's a it's a measure. The labor
market stats are fairly complicated, but they are and I've
sort of said this before, but they're a measure that
we've used since nine eighty six, so they give us
a pretty good long term look at what's happening in
(09:50):
the market, and and you know, some of those things
under the hood will be I'd expect, you know, some
economists to start writing some reports and things shortly about
what's happening with the participation rate and what all this means.
I just think, you know, it may be that it's
not that material to what's happening in the recovery, and
(10:10):
the recovery give will take a few months. But I
just can see that that politicals You know, if it
had been five point two percent and it had come
down a tiny bit, it might not have changed the
overall equation much, but you could bet that the Finance
Minister and the government would be out there talking it up.
And unfortunately for them, that's not going to be much
fun for them today.
Speaker 2 (10:28):
No, here's a text Spin Spin Spin from hosting earlier saying,
asb it'd be five point two This government have no idea.
Can't wait to see the back of them November. Back
on growth, growth, more money in your back pocket, fixing
the basics. What crap two hundred and seventy made redundant
from the warehouse and work going to some Vietnamese call center.
Speaker 1 (10:49):
So well at the warehouse, is it? I mean, I
was all prepared for it, to talk about the irony
because if it had been a lower unemployment rate today
and we had the warehouse jobs going, of course, but
I think the warehouse has some specific issues and some
internal restructuring to do, and that's probably driving their job
cuts as much as the overall, you know, cyclical downturn.
(11:12):
You know, Briscoe's had a great result yesterday and Ike
is hiring more staff, so you know, there are still
you know, I think the signs there that the economy
is starting to turn the right direction. It just may
be turning in a much slower at a much slower
pace than is helpful for someone who's trying to win
an election.
Speaker 2 (11:33):
Thank you very much, as always, Business New Zealand Herald
Business editor at largely Dan, Thanks Garry for more from
News Talks B Listen live on air or online, and
Speaker 1 (11:44):
Keep our shows with you wherever you go with our
podcasts on iHeartRadio
You're listening to a podcast from News Talk sed be
follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
The unemployment rate has arisen to five point four percent,
the highest since September twenty fifteen. New Zealand Herald Business
editor at largely and Dan joined me, now I believe.
So what do we make of this? When I announced
when I read out the news, my caller Troy went,
(00:37):
that's not great in an election.
Speaker 1 (00:38):
Yet that's some very good analysis.
Speaker 2 (00:42):
I mean, we should have stuck with Troy, do you.
Speaker 1 (00:44):
Think, well, I think the numbers. We hope the number
goes down, not up, and it's gone up, so that's
a good starting point. Economists had thought it would sort
of hold steady at five point three. I think asb
thought it might go down. So there was some hope
that we were we had seen the peak of unemployment,
and it appears we haven't. I mean, I was talking
(01:05):
to an economist last night who said, look in the ground,
scheme five point two, five point three, five point four,
all of those are possible and probably don't change what's
happening in the economy that much. But as a political story,
it's not going to be a good day for the government.
I wouldn't think just because you know, it's it's so
(01:27):
sort of I mean, it's an emotional thing. It's a
big thing, unemployment and the worst in ten years. This
is a government that came in was certainly in opposition.
They talked a lot about jobs and what hadn't gone
well with the previous government. What we're seeing is that
the employment creation in the December quarter just was really flat.
(01:52):
There was a tiny little bit of employment growth, so
that not many jobs new jobs were created. What's made
the difference is for the past few quarters, the participation
rate has fallen, so fewer people have been engaging with
the workforce because they've been going into further training or
things like that, staying in school, and that didn't happen
(02:15):
this time. More people, the size of the labor force
has actually grown and more people are engaging in the
labor market so are available to be classified as employed
or unemployed, and that's lifted the numbers of unemployed. I think,
so it is you know, it is fairly technical, but
you know that's one hundred and sixty five thousand unemployed
(02:37):
New Zealanders and it's a quarterly increase of five thousand people.
So it's a it's a real thing.
Speaker 2 (02:44):
I was just going to say, you know, there'll be
people saying, what's the difference really between three five point four.
The difference is families who are going to struggle to
pay rental mortgage.
Speaker 1 (02:55):
Yeah, oh absolutely, at a personal level that that's very real.
It's also you know, and when we look at step
back and look at the economic story and the recovery,
it's it's sort of like a timing thing. It's just
it suggests that it's taking a bit longer for the
you know, the jobs market to turn around, or it
may take a bit longer, and that's not great. We
(03:18):
know it's a sort of lagging indicator and it takes
longer for unemployment to recover, but it means that we
might not be seeing a recovery and that that part
of the economy, you know, the job, jobs, creation and
things until later in the year. And of course it
is election year, so it is going to be a
political football, I would imagine.
Speaker 2 (03:37):
Paul writes, could you ask mister Dan what the historic
average is for unemployment? He says five percent is helpful
for the economy. That means there's workers available but it
doesn't put excess pressure on higher wages, which will keep
inflation down.
Speaker 1 (03:51):
Yep. That is a way of looking at it, because
you know, the historic average I think is around five
point two five point three percent. I don't have the
exact number in front of me, but that includes some
periods of obviously lower and unemployment, and it this particular
survey goes back to nineteen eighty six and includes periods
(04:13):
like the early nineties when we got up into nine
point eight ten percent. So you know, so by historic
standards you might say, well, it's not terrible, but then
you've got to look at it in the context of
the world we live in now, and so we have
a lot more workers on contracts and working numerous part
(04:34):
time jobs, and they tend to feature in underutilization numbers,
which is to say, if you're a contract or you're
a small business person or something like that, you haven't
got enough work to survive on, you would be considered underutilized.
And that rate is about thirteen percent. So there are
a lot more people out there who have some work
(04:56):
but not enough than there are people who are completely unemployed,
which of course is categorized by stats n Z as
being no work at all. So if you have any
part time work, you're not unemployed, you fall into the
under utilization rate. And I think the world's changed a
bit since the eighties and nineties when everyone sort of
had a salaried or a wage job, you know, and
(05:21):
things were a lot more stable around that sort of thing.
So I think it is tough. The the point your
caller makes, your texture makes is relevant in terms of
where interest rates might go and the fact that there
may be more what economists call spare capacity in the
economy because of the higher unemployment rate. You know, it's
(05:43):
a trade off though, because you really don't want to
see people on the sort of unemployment scrap heat, particularly
long term. The youth unemployment rates are always much higher,
and some of the ethnicities re unemployment and things are
always much higher, So there are some social things there
where it's not good. You'd probably say, you know, the
(06:04):
economy can't cope when unemployment falls too low because it
does gener inflation, so that's built into the system. But
you know, we'd rather see it sort of four point
five something like that and the economy running at capacity.
We haven't got that much capacity in the economy we
might as well run run at it.
Speaker 2 (06:23):
Why don't we put out underutilized and unemployed at the
same time.
Speaker 1 (06:28):
Well, we do, it is there, It's just that we
just don't report it as well. Yeah, I mean it's
it's in the story that you know. I definitely definitely
do report it. But I guess the bigger motive figure,
the one that we all have grown up learning to understand,
you know, going right back, is unemployment. So that's the
one that grabs the headline.
Speaker 2 (06:47):
But yeah, I think I think we should do both henceforth. Yeah,
I think, well we announced both.
Speaker 1 (06:51):
It's true, although it can be very hard to fit
under utilization and unemployment as words into the Herald's headline template.
Speaker 2 (06:59):
But no, but where I can do that, So I
think I think that's what I'll do. Yeah, I think
I think it is worth that's a better measure of
the economy and what people are doing.
Speaker 1 (07:08):
Yeah, yeah, that's right. I think it reflects more accurately
the kind of workforce we actually have. It's not cut
and dried and black and white, and it's not a
situation where you know, people are totally employed or totally unemployed.
Most people where a lot of people are in that
middle category.
Speaker 2 (07:28):
And Bruce another text says, it does an unemployment go
up every December because kids are leaving school and university.
Speaker 1 (07:34):
Well, it does, but these are seasonally adjusted figures, so
stats n Z is aware of what the changes are
based on seasonal trends and factors those into the numbers,
so that hopefully, I mean, I'm sure there's some complicated
maths and some subjective calls they have to make, but
they should be accounting for that in the numbers. So
(07:56):
these are seasonally adjusted figures and they will capture things
like people all leaving school at once and that kind
of thing.
Speaker 2 (08:04):
Another textas says they're very engaged, are Texters? Yeah, listeners
very engaged. Could people be holding off on retirement due
to high inflation be contributing to higher unemployment.
Speaker 1 (08:16):
Yeah, that'll keep the participation rate up, but keep the
size of the you know, the labor force up, and
that can keep I guess you know, it means there
are fewer jobs available for people coming through. But you know,
as you say, it's it's a cost of living thing.
A lot of people are working longer because they have to.
(08:37):
And you know, look, look some people there is a
demographic thing where people are also probably working longer because
they are still you know, contributing and doing great things
in the workforce. And that's a choice, but it is
the demographics of it probably are playing a part in
the way that our unemployment figures are shaped these days.
Speaker 2 (08:56):
And another one says, what is unemployment? I'm forty one,
I don't have a job, but I live off my
managed funds. Do I have to declare I want a
job to be considered unemployed?
Speaker 1 (09:07):
Well, the this is or for survey. There are two
ways that could measure it. They you know, so presumably
you're not on a job seeker so you're not unemployed
by that measure. By this measure, if you were surveyed
and you were, yeah, you'd have to be actively looking
for a job, as the simple answer. So if you're
not looking for a job because you're doing okay, living
off the living off your savings and things, then you
(09:28):
wouldn't classify as being engaged in the workforce. So yeah,
it's a it's it's a it's a measure. The labor
market stats are fairly complicated, but they are and I've
sort of said this before, but they're a measure that
we've used since nine eighty six, so they give us
a pretty good long term look at what's happening in
(09:50):
the market, and and you know, some of those things
under the hood will be I'd expect, you know, some
economists to start writing some reports and things shortly about
what's happening with the participation rate and what all this means.
I just think, you know, it may be that it's
not that material to what's happening in the recovery, and
(10:10):
the recovery give will take a few months. But I
just can see that that politicals You know, if it
had been five point two percent and it had come
down a tiny bit, it might not have changed the
overall equation much, but you could bet that the Finance
Minister and the government would be out there talking it up.
And unfortunately for them, that's not going to be much
fun for them today.
Speaker 2 (10:28):
No, here's a text Spin Spin Spin from hosting earlier saying,
asb it'd be five point two This government have no idea.
Can't wait to see the back of them November. Back
on growth, growth, more money in your back pocket, fixing
the basics. What crap two hundred and seventy made redundant
from the warehouse and work going to some Vietnamese call center.
Speaker 1 (10:49):
So well at the warehouse, is it? I mean, I
was all prepared for it, to talk about the irony
because if it had been a lower unemployment rate today
and we had the warehouse jobs going, of course, but
I think the warehouse has some specific issues and some
internal restructuring to do, and that's probably driving their job
cuts as much as the overall, you know, cyclical downturn.
(11:12):
You know, Briscoe's had a great result yesterday and Ike
is hiring more staff, so you know, there are still
you know, I think the signs there that the economy
is starting to turn the right direction. It just may
be turning in a much slower at a much slower
pace than is helpful for someone who's trying to win
an election.
Speaker 2 (11:33):
Thank you very much, as always, Business New Zealand Herald
Business editor at largely Dan, Thanks Garry for more from
News Talks B Listen live on air or online, and
Speaker 1 (11:44):
Keep our shows with you wherever you go with our
podcasts on iHeartRadio
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