The unemployment rate has risen to a nine-year high of 6.5 per cent in the September quarter, with new figures showing the young, Maori and Pacific Islanders bearing much of the impact.
The rise was from an unemployment rate of 6 per cent in the June quarter.
Economists expected it to go higher, despite 0.1 per cent growth in gross domestic product in the June quarter, following five quarters of contraction.
The Household Labour Force Survey published today by Statistics New Zealand also showed seasonally adjusted employment falling 0.8 per cent, worse than the 0.3 per cent median fall prediction in a Reuters poll of economists.
The seasonally adjusted labour force participation rate was 68 per cent, down 0.4 percentage points from the June quarter.
In unadjusted terms, employment for those aged 15-19 fell by 22,700 to 116,500 in the year to September.
For those aged 60-64 employment rose by 13,100 to 192,600, while for the 65-plus group it was up 6600 to 81,800.
For people who identify as Maori only, the unemployment rate lifted to 14.2 per cent from 9.6 per cent a year earlier, while for Pacific peoples the rise was to 12.3 per cent from 7.7 per cent.
For all people who identified with the Maori group, including those who identified with other groups as well, the rise was from 8.2 per cent to 13 per cent.
Westpac economists Brendan O'Donovan and Dominick Stephens said today's figures confirmed the severe toll the recent recession took on the labour market.
The really important part of today's data was the 0.7 per cent fall in hours worked during the quarter, coming on top of a 1.9 per cent fall last quarter, they said.
They had expected to see a lift in hours worked, reflecting a rise in economic activity over the latest quarter.
Unemployment had hit the same groups as in previous recessions.
"Unemployment among youth, Maori, and Pacific Islanders is skyrocketing. Unemployment in Northland is 9.3 per cent, and in Gisborne it is 10 per cent," the Westpac economists said.
"Male unemployment has risen much faster than female unemployment, as the disproportionately-male construction and manufacturing industries are hit hardest."
But they also said they expected the September quarter to be the last quarter of "sharply rising" unemployment.
BNZ Capital head of research Stephen Toplis said that as in previous tough times, the young, Maori, and people in provincial towns were getting "beaten up" in the downturn.
While the recession was officially over, and business leading indicators were in the ascendancy, further lay-offs appeared to be ahead, said Toplis.
He estimated a further 9000 people would lose jobs in the December quarter and that, combined with further net migration-led growth in the working age population would result in the unemployment rate rising to 7 per cent in the December quarter.
"In our opinion, it won't be until the second half of next year until corporates start taking on staff in any meaningful number," Toplis said.
"Accordingly, we stick to our view that the unemployment rate will peak at around 7.5 per cent."
- NZPA
