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 (00:06):
You're listening to the Kerry Wood and Morning's podcast from
news Talks, he'd be.
Speaker 2 (00:11):
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,
(00:32):
that's not great in an election.
Speaker 3 (00:34):
Yet that's some very good analysis.
Speaker 2 (00:37):
I mean, we should have stuck with Troy, do you.
Speaker 3 (00:39):
Think, well, I think the numbers. We hope the number
goes down, not up, and it's gone up, so that's
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
(01:00):
to an economist last night who said, look in the
Grand 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 so sort
(01:22):
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
(01:44):
creation in the December quarter just was really flat. 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
(02:06):
like that, staying in school, and that didn't happen 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
(02:28):
know that's one hundred and sixty five thousand unemployed New
Zealanders and it's a quarterly increase of five thousand people.
So it's a it's a real thing.
Speaker 2 (02:39):
I was just going to say, you know, there were
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 3 (02:50):
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
(03:13):
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 in 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 (03:32):
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 work is available, but
it doesn't put excess pressure on higher wages, which will
keep inflation down.
Speaker 3 (03:46):
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 dates that.
This particular survey goes back to nineteen eighty six and
(04:07):
includes periods 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
(04:29):
numerous part 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
(04:50):
have some work 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 underutilization. And I think the world's
changed a bit since the eighties and nineties when everyone
(05:10):
sort of had a salaried or a wage job, you know,
and things were a lot more stable around that sort
of thing. So I think it is tough. The point
your caller makes, your texture makes is relevant in terms
of where interest rates might go and the fact that
(05:31):
there may be more what economists call spare capacity in
the economy because of the higher unemployment rate. You know,
it's 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
(05:53):
always much higher. So there are some social things there
where it's not good. You'd probably say, you know, the
economy can't cope when unemployment falls too low because it
does generate 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
(06:15):
might as well run run at it.
Speaker 2 (06:19):
Why don't we put out underutilized and unemployed at the
same time.
Speaker 3 (06:23):
Well, we do.
Speaker 2 (06:24):
It is there, It's just that we just don't report
it as well.
Speaker 3 (06:26):
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 (06:42):
But yeah, I think I think we should do both henceforth. Yeah,
I think, well we'll announced both.
Speaker 3 (06:46):
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 (06:54):
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 bitter measure of
the economy and what people are doing.
Speaker 3 (07:03):
Yeah, yeah, that's right. It's a 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 (07:23):
And Bruce another text says, it does an unemployment go
up every December because kids are leaving school and university.
Speaker 3 (07:29):
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
(07:51):
these are seasonally adjusted figures and they will capture things
like people all leaving school at once and that kind
of thing.
Speaker 2 (07:59):
Another textas says they're very engaged, are Texters? Yeah, our
listeners very engaged. Could people be holding off on retirement
due to high inflation be contributing to higher unemployment.
Speaker 3 (08:12):
Yeah, that'll keep the participation rate up and 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 cost of living thing. A
lot of people are working longer because they have to.
(08:32):
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 (08:51):
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 3 (09:02):
Well, this is all a 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 you
(09:24):
wouldn't classify as being engaged in the workforce. So yeah,
it's a it's 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
(09:45):
in 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 and recovered
and the give will take a few months, but I
(10:08):
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 (10:23):
No, here's a text Spin Spin Spin from hosting earlier saying,
asb wo'd be five point two, This government have no idea.
Can't wait to see the back of the 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 3 (10:44):
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.
(11:07):
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 (11:28):
Thank you very much, as always, Business New Zealand Herald
Business editor at largely Dan.
Speaker 1 (11:34):
Thanks Garry for more from carry Wood and Mornings. Listen
live to news talks that'd be from nine am weekdays,
or follow the podcast on iHeartRadio
You're listening to the Kerry Wood and Morning's podcast from
news Talks, he'd be.
Speaker 2 (00:11):
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,
(00:32):
that's not great in an election.
Speaker 3 (00:34):
Yet that's some very good analysis.
Speaker 2 (00:37):
I mean, we should have stuck with Troy, do you.
Speaker 3 (00:39):
Think, well, I think the numbers. We hope the number
goes down, not up, and it's gone up, so that's
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
(01:00):
to an economist last night who said, look in the
Grand 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 so sort
(01:22):
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
(01:44):
creation in the December quarter just was really flat. 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
(02:06):
like that, staying in school, and that didn't happen 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
(02:28):
know that's one hundred and sixty five thousand unemployed New
Zealanders and it's a quarterly increase of five thousand people.
So it's a it's a real thing.
Speaker 2 (02:39):
I was just going to say, you know, there were
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 3 (02:50):
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
(03:13):
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 in 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 (03:32):
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 work is available, but
it doesn't put excess pressure on higher wages, which will
keep inflation down.
Speaker 3 (03:46):
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 dates that.
This particular survey goes back to nineteen eighty six and
(04:07):
includes periods 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
(04:29):
numerous part 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
(04:50):
have some work 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 underutilization. And I think the world's
changed a bit since the eighties and nineties when everyone
(05:10):
sort of had a salaried or a wage job, you know,
and things were a lot more stable around that sort
of thing. So I think it is tough. The point
your caller makes, your texture makes is relevant in terms
of where interest rates might go and the fact that
(05:31):
there may be more what economists call spare capacity in
the economy because of the higher unemployment rate. You know,
it's 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
(05:53):
always much higher. So there are some social things there
where it's not good. You'd probably say, you know, the
economy can't cope when unemployment falls too low because it
does generate 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
(06:15):
might as well run run at it.
Speaker 2 (06:19):
Why don't we put out underutilized and unemployed at the
same time.
Speaker 3 (06:23):
Well, we do.
Speaker 2 (06:24):
It is there, It's just that we just don't report
it as well.
Speaker 3 (06:26):
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 (06:42):
But yeah, I think I think we should do both henceforth. Yeah,
I think, well we'll announced both.
Speaker 3 (06:46):
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 (06:54):
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 bitter measure of
the economy and what people are doing.
Speaker 3 (07:03):
Yeah, yeah, that's right. It's a 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 (07:23):
And Bruce another text says, it does an unemployment go
up every December because kids are leaving school and university.
Speaker 3 (07:29):
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
(07:51):
these are seasonally adjusted figures and they will capture things
like people all leaving school at once and that kind
of thing.
Speaker 2 (07:59):
Another textas says they're very engaged, are Texters? Yeah, our
listeners very engaged. Could people be holding off on retirement
due to high inflation be contributing to higher unemployment.
Speaker 3 (08:12):
Yeah, that'll keep the participation rate up and 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 cost of living thing. A
lot of people are working longer because they have to.
(08:32):
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 (08:51):
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 3 (09:02):
Well, this is all a 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 you
(09:24):
wouldn't classify as being engaged in the workforce. So yeah,
it's a it's 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
(09:45):
in 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 and recovered
and the give will take a few months, but I
(10:08):
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 (10:23):
No, here's a text Spin Spin Spin from hosting earlier saying,
asb wo'd be five point two, This government have no idea.
Can't wait to see the back of the 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 3 (10:44):
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.
(11:07):
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 (11:28):
Thank you very much, as always, Business New Zealand Herald
Business editor at largely Dan.
Speaker 1 (11:34):
Thanks Garry for more from carry Wood and Mornings. Listen
live to news talks that'd be from nine am weekdays,
or follow the podcast on iHeartRadio
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