A Reprieve In The Labour Market That’s Too Early To Celebrate
by Kiwi Economics · SCOOP- The job market will likely be spared some pain in the September quarter. Businesses powered through, with filled jobs growing in each of the three months of the September quarter. But with a further spike in oil, there could be tougher times ahead.
- We expect the September quarter unemployment rate to fall from 5.6% to 5.4%. This will be driven by a gain in employment of 0.6% and offset somewhat by a higher participation rate at 70.9% up from 70.7%.
- The unevenness in the labour market is likely to persist, with older age groups snapping up more jobs and leaving fewer for the younger workers. Unemployment amongst under 25s is expected to remain painfully high.
The data for the September quarter shows that Kiwi businesses were powering through the oil crisis and trying to get on with it. However, businesses’ costs have been building. And they’ve been struggling to match up costs with prices. Although intentions to raise prices are there, the consumer has been too weak, their wallets too empty to afford higher prices.
We expect unemployment to have peeled back a bit in the September quarter, to 5.4% (down from 5.6% in the June quarter). With growth in the participation rate to 70.9% (up from 70.7%), alongside a rise in employed workers of 0.6%. That's a nice outcome for the quarter. BUT, that’s looking at the past. Looking into the future, does that mean unemployment peaked at 5.6%, or (like inflation) will it bounce back? We assume it's bouncing back in the current quarter, unfortunately.... reflecting the delayed softness in the economy and the resurgence of the oil prices.
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The estimated working age population has increased by 0.2% over the September quarter and 1% compared to the September quarter of 2025 according to Stats NZ. According to Seek data on job adds, there’s been a 0.7% growth in job adds in the September quarter and a 7.8% increase on the September year. This bodes well. Filled jobs grew by 0.14% in July, 0.16% in August and 0.31% in September.
Confidence improved in the September quarter; hopes the geopolitical conflict was resolving (or at least not getting worse) spurred businesses on. Intentions to invest in both plants and buildings rose sharply, as well as intentions to hire, according to the Quarterly Survey of Business Opinion. We expect the September quarter labour market data to reflect the rebound in confidence and drop in oil price we experienced over the September quarter.
We expect wage growth to have remained subdued, with private sector wages growing 0.7% compared to the June quarter. The point being, it’s a bit too early to celebrate a labour market tightening. This is just a small move and not sufficient to move the needle on the economy.
We expect young people to still be feeling the pinch. Previous data releases have revealed that the unemployment rate for those aged 15 - 24 years old was at 25.3% in June, and 12% for those 20 - 24 years old. With just shy of one in four 20 - 24-year-olds reporting being underutilised. That number is likely to remain elevated, with young workers continuing to be disadvantaged. Filled job data from July, August and September consistently show that the 65+ age group are snapping up more jobs than those in the 30 to 34 age group, and keeping up with the 45- to 49-year-old age group. This leaves fewer jobs for young people to snap up.
The geographic divide across the motu is also going to continue. We’ve seen Canterbury take the lead in filled job growth over the September quarter, and that will be reflected in the upcoming data release. The Auckland job market however is also showing signs of improvement, so the regional rankings will likely see a minor re-shuffle. However, we expect that the North-South regional divide persisted over the September quarter.
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