New Zealand’s seasonally adjusted unemployment rate was 5.2% in the June 2025 quarter, according to figures released by Stats NZ today.

This is the highest unemployment rate since 2020.

It compares with 5.1% in the March 2025 quarter and 4.7% in the June 2024 quarter.

It was slightly better than the 5.3% expected by the consensus of economists but in line with Reserve Bank forecasts.

There were 158,000 unemployed people (seasonally adjusted) in the June 2025 quarter, compared with 156,000 in the March 2025 quarter. Annually, unemployment rose by 16,000 people.

But the numbers for New Zealand’s largest city look much worse.

The unemployment rate in the Auckland region increased 1.5% annually, from 4.6% in the June 2024 quarter to 6.1% in the June 2025 quarter. Annually, the number of unemployed people in Auckland increased by 15,000.

Auckland had 23,100 fewer people in employment year-on-year, but its total labour force also fell.

“Labour market conditions have changed considerably in the last few years. Since the June 2022 quarter, the unemployment rate has risen by 1.9 percentage points,” labour market spokesman Jason Attewell said.

“The underutilisation rate has risen by 3.5 percentage points over the same period.”

The underutilisation rate was 12.8% in the June 2025 quarter, compared with 12.4% in the March 2025 quarter and 11.9% in the June 2024 quarter.

Underutilisation is a broad measure of untapped labour market capacity that includes unemployed and underemployed people, along with the potential labour force.

“A relatively sharp rise in the underutilisation rate suggests overall slack in the labour market has opened up a little more than the headline unemployment rate implies,” said ANZ senior economist Miles Workman.

The employment rate was 66.8% in the June 2025 quarter, compared with 67.1% in the March 2025 quarter and 68.3% in the June 2024 quarter.

“Wages continued to grow, although at a slower pace compared with June 2024,” Attewell said.

Annual wage inflation was 2.4%, compared with 4.3% in the June 2024 quarter, and average ordinary time hourly earnings were $43.39, up 4.5% (compared with a 5% rise in the June 2024 quarter).

ANZ market strategist David Croy said there was little market reaction, the New Zealand dollar remaining at around US59.02c in the minutes following the release.

“It [the data] was on the soft side, relative to where the Reserve Bank saw things,” he said, adding the release confirmed that there was slack in the labour market.

Earlier

There was anecdotal evidence that firms holding on to labour were not experiencing the pick-up in demand they expected, which meant more jobs were at risk, ANZ senior economist Miles Workman said.

“A degree of ‘labour hoarding’ appears to have suppressed unemployment in recent quarters,” he said.

“If a recovery in economic momentum doesn’t do the heavy lifting when it comes to ‘right-sizing’ firms’ labour input, a further reduction in headcount may be needed.”

With the high-frequency data pointing to an economic slowdown, risks around employment growth over the next few quarters were skewed to the downside, he said.

ASB senior economist Mark Smith said he expected the Reserve Bank would likely take “more signal from trends in labour costs than the unemployment rate”.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.