Unemployment could rise to 5.5 percent in the middle of the year before the rate starts to fall again. File photo. Photo: RNZ
About 30,000 more people are unemployed than a year ago, and some forecasters say another 10,000 or 15,000 could be out of work before the cycle turns.
Unemployment rose to 5.1 percent in the last quarter of the year, adding 4000 jobs to the total 33,000 jobs lost in the calendar year of 2024.
BNZ chief economist Mike Jones said he expected unemployment to reach 5.5 percent in the middle of the year before the rate started to fall again.
"It's not necessarily a story of continued declines in employment, more that we think it will be a while before the economy gets back on to a footing where it can generate enough jobs to match growth in the labour force. I think labour demand looks set to fall short of supply for much of this year.
"Assuming unemployment does peak around our expectations would see unemployed numbers growing by an extra 15,000 or so from the current 156,000."
Infometrics chief forecaster Gareth Kiernan said he expected another 10,000 people would be out of work through the first half of this year.
But Miles Workman, a senior economist at ANZ, said his forecast was that employment had been as low as it would go in the last quarter of last year.
He said he expected an "anaemic" 0.1 percent quarter-on-quarter increase through the first here months of this year, with momentum picking up from there.
"However, that's not enough to stop the labour market from 'loosening' and the unemployment rate from rising a little further in the very near term. Growth in labour supply is expected to outpace labour demand for a little bit longer, resulting in a higher unemployment rate - our forecast is for a peak of 5.3 percent over the first half of 2025. So while we might be past the worst when it comes to the number of employed persons, those already in employment are unlikely to feel a meaningful change in their bargaining power any time soon."
He said in the year to December 2023, the number of people employed had lifted by 80,000.
Kiwibank chief economist Jarrod Kerr said the numbers could have been worse.
"Although it's horrible to say, especially to anyone caught up in the current downturn, but it's not as bad as previous downturns. Different shades of ugly. We saw a lot more job losses in a wake of the GFC, and severe job losses in the early 1990s. But recessions are still recessions, and people get hurt, and inequality widens. "
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