KEY POINTS:
The unemployment rate rose to 4.2 per cent in the September quarter, its highest rate for nearly five years, and economists expect it to keep climbing.
It was 3.9 per cent in June.
Since the start of the year the economy has added just 2000 more jobs, not nearly enough to keep pace with the increase in the population, so unemployment has risen steadily from the all-time low of 3.4 per cent recorded at the end of 2007.
There were some signs of resilience: employment grew by 3000 or 0.1 per cent in the September quarter - surprising the markets which had expected a 0.6 per cent drop - and all of the increase was in full-time jobs.
But Westpac economist Dominick Stephens described that quarter as a lull between storms: the recession of the first half of the year, driven by high petrol prices and drought, and the "horrendous" market meltdown of October which is expected to lead to a full-blown global slump.
Unemployment rates were highest in Northland, 6.5 per cent, and on the East Coast, 6.4 per cent. Auckland was also above the national average at 4.4 per cent.
Employment fell in construction, retailing and financial services - where much of the jobs growth of the past five years had been - but rose in manufacturing, health and education.
"There have been chronic labour shortages in those sectors and employers have finally been able to fill vacancies. But the pent-up demand has probably been sated now," Mr Stephens said. Westpac expects the unemployment rate to hit 5.6 per cent by the end of next year.
