The unexpected fall in unemployment shows job growth is strong compared with most other countries, the Government says.
The Household Labour Force Survey released on Wednesday shows unemployment at 5.3 percent in the last three months of 2015, down from 6 percent three months earlier.
It's at a near seven-year low.
"It's positive to see strong falls in unemployment in many regions," said Employment Minister Steven Joyce.
"The construction industry led the way with 27,500 more people in the year to December, and it's also positive to see strong growth in technicians and trade workers with 20,800 more employed over the year."
Mr Joyce said the rate was better than nearly all commentators anticipated.
"While that measure will continue to move around each quarter, the job growth and employment figures for New Zealand continue to be strong relative to nearly all other developed countries."
Labour's finance spokesman, Grant Robertson, says the government must not become complacent.
"This year has started off in volatile fashion, with stock markets diving, the global dairy price continuing to slide and Fonterra's milk payout again dropping," he said.
"The unemployment figures need careful reading, given that any drop is offset by the number of people actively looking for a job."
Mr Robertson said that meant people were walking away from the labour market, which contributed to a lower unemployment rate.
The Council of Trade Unions says the fall is welcome but the economy is still not creating enough jobs to match the increase in the working age population.
"Even at 5.3 percent or 133,000 people, unemployment is far too high for an economy that has been growing strongly for several years," said CTU economist Bill Rosenberg.