New Zealand's unemployment rate predicted to peak halfway through year
New Zealand's unemployment rate will likely continue rising in 2025 and peak halfway through the year, according to reports.
Forecasts from various economists believe the country's labour market is expected to remain challenging for jobseekers through 2025, Stuff reported.
"We think the unemployment rate has further to climb and might peak at just under 5.5% around the middle of the year," said Mike Jones, chief economist at BNZ, as quoted by RNZ.
New Zealand's unemployment rate is at 4.8% as of the September 2024 quarter, following a steady increase over the past years.
However, the volume of job ads rebounded in November 2024 in SEEK's latest Employment Report, indicating a demand for workers.
But Jones noted that while employment intentions might be more positive for 2025 and economic indicators are turning around, these factors will take time before impacting hiring decisions.
"I think for at least the first half of next year, we're going to see employment remain under downward pressure, wage growth continuing to soften, and labour market conditions generally weaken a little more," Jones said.
Miles Workman, senior economist at ANZ, echoed Jones' prediction of a tough start to 2025 for jobseekers.
"The first half of 2025 is looking like it'll be tough going, but there is light at the end of the tunnel given the economy is turning a corner," Workman said, as quoted by RNZ.
However, he cautioned that the recovery would not be uniform across industries: "The most interest-rate sensitive pockets of the economy – private sector construction, non-food manufacturing, retail trade – should see the fastest recovery as interest rates become less of a handbrake," he added.
The result of New Zealand's low demand for workers is the rise of Kiwis searching for opportunities overseas, raising concerns of a potential brain drain last year.
Shay Peters, chief executive of Robert Walters, said they observed a "significant rise" in Kiwis looking to relocate.
"The lack of opportunities and inadequate salaries in New Zealand are driving people to seek employment overseas," Peters said, as quoted by RNZ. "This is a concerning trend which could impact the country for many years, as it stands to lose a substantial number of highly skilled individuals, potentially for the long-term."
