New Zealand's unemployment rate is set for another gloomy update today, economists have predicted another increase to the current 4 per cent figure last reported.

The seasonally adjusted unemployment rate was 4 per cent in the December 2023 quarter, which was a further increase from 3.9 per cent in the quarter before. According to ASB economist Mark Smith, the country is seeing the last signs of residual strength in the marketplace before it weakens.

He predicted the figure today will be 4.3 per cent but said it could be even higher.

"What we see now is increasing signs that firms have gone from a situation where they can't find any workers to 'now we probably have one too many - and we're looking at downsizing if we can'," Smith told Newstalk ZB.

While "everybody is doing it tough", according to Business NZ's Catherine Beard, certain industries in particular have felt the pinch more than most as the revenue hits have continued to come.

She said, in general, unemployment and economic damage had affected all industries across the board.

"Building construction, as everybody knows, is doing it tough. That's no surprise. Manufacturing is doing it pretty tough. Retail is doing it pretty tough - you just need to walk down any high street and see the sales going on to try and entice people to open their wallets," she told ZB.

"And the surveys tell us that the biggest problem for these businesses is just the slow down in demand from consumers, and of course consumers are doing it tough because interest rates are high, cost of living is still high, their mortgage rates are more expensive."

Today's figure will reflect Q1 of this year (the three months till the end of March) and Beard believes that, despite what the figure says, the economic landscape has likely worsened further in the past two months.

"We're clearly in recession and the surveys that we do every month indicate that employment is in contraction for manufacturing and services so, yeah, it's definitely getting tougher."

Beard said it was surprising that the unemployment rate had remained as low as it was given the economic damage from the recession. She noted that the shift in the marketplace from struggling to find workers to suddenly needing to lay some off was strange.

"The Government has dialled back immigration and closed the opportunity on that side of things so it might take a bit of pressure off the job market," she said.

"To be honest, we've seen surveys of what employers do when they need staff and immigration is usually their last resort. Because it isn't that straightforward, you've got to jump through a few hoops."

Smith was asked about the other figures being released alongside unemployment, such as work participation rates and labour costs, and how they impacted inflation within the country.

Smith said New Zealand's work participation rate was among the highest in the OECD and there is an expectation for it to remain high, although it is likely to have sloped a little due to the prospect of finding work declining.

He said the country's flexibility had increased but the productivity rates had dipped.

"And the problem with that is core inflation has remained persistently high and that's really a challenge for the Reserve Bank," he said.