New Zealand’s unemployment rate ticked higher to 5.4% in the December 2025 quarter instead of holding steady at 5.3%, reinforcing expectations for continued monetary easing from the RBNZ despite modest employment gains of 0.5% quarter-on-quarter.
Key Takeaways
- Unemployment rate increased to 5.4% from 5.3% quarter-on-quarter, up 0.3 percentage points year-on-year
- Employment rate improved slightly to 66.7% from 66.6%, though remains down 0.5 percentage points annually
- Underutilisation rate held steady at 13.0%, unchanged from the previous quarter
- Labour force participation rose to 70.5% from 70.3%, partially offsetting weakness elsewhere
- Wage growth continued decelerating, with annual salary and wage rate increases slowing to 2.0% from 3.3% in December 2024
- Employed persons increased modestly to 2,886,000, up 14,000 from the previous quarter
Employment gains, while positive, were modest. The 0.5% quarterly increase in employed persons translated to just 14,000 additional jobs, bringing total employment to 2,886,000. However, this represents only a 0.2% annual increase, well below population growth and indicative of a jobs market struggling to generate robust job creation.
Link to official Stats NZ Labour Market Statistics (December 2025 Quarter)
More concerning, the underutilisation rate (a broader measure encompassing unemployed, underemployed, and those in the potential labour force) remained elevated at 13.0%, with 409,000 people affected.
Perhaps most significant for monetary policy considerations was the continued deceleration in wage growth. The Labour Cost Index (LCI) for all salary and wage rates increased just 2.0% annually, down from 3.3% in December 2024 and the slowest pace in several years. This compares to annual consumer price inflation of 3.1% for the same period, suggesting real wages remain under pressure.
Market Reactions
New Zealand Dollar vs. Major Currencies: 5-min
Overlay of NZD vs. Major Currencies Chart Faster with TradingView
The New Zealand dollar weakened broadly following the employment data release, as traders appeared to zoom in on the uptick in overall joblessness and slower wage growth.
NZD tumbled sharply against AUD (-0.26%) as the dovish RBNZ outlook contrasted with the RBA’s shift to rate-hiking mode earlier this week. The Kiwi also sustained losses against EUR (-0.18%) and GBP (-0.22%) ahead of the ECB and BOE decisions later on, but it managed to pull higher against CHF (+0.03%) and JPY (+0.21%) hours after the release, likely on broader market dynamics and counter currency flows.
Interested in fundamental analysis made for newbies and how to pair it up with technical analysis to find high-quality opportunities that may match your trading and risk management style? Check out our Premium membership for event trading guides, short-term strategies, weekly recaps and more!
BabyPips.com Annual Premium Members also get an exclusive 30% discount on the annual subscription for the first year on Tradezella–the top-rated journaling app! ($120 in savings)! Click here for more info!
Feed from Babypips.com