The unemployment rate has fallen to 4 percent from 4.2 percent the previous quarter, Statistics New Zealand has announced.
Released on Wednesday, the household labour force survey for the June 2020 quarter shows the rate of unemployment has unexpectedly dropped.
But indicating that COVID-19 has impacted the workforce, the underutilisation rate jumped from 10.4 percent to 12 percent and "hours worked" fell a record 10 percent.
The survey measures unemployment based on three criteria: not having a job, able to take an available job in the last week and actively looking for work in the last month.
The results, which represent an overall average over 13 weeks to June 2020, indicate that during lockdown, less people who didn't have work were actively seeking it.
As they weren't technically 'unemployed', they weren't counted, resulting in a fall to the overall rate. However, Statistics New Zealand labour market manager Sean Broughton said many of these people were captured in the 'underutlisation' rate.
"Underutilisation - a broader measure of spare capacity in the labour market - and hours worked, provide a more detailed picture of New Zealand's labour market than the unemployment rate alone," Broughton said.
"This quarter, underutilisation rose from 10.4 percent to 12 percent the largest quarterly rise since the series began, while hours worked were down by over 10 percent another record," he added.
Clarifying that although there was a cross-over, jobseeker numbers were different to the official unemployment rate, Broughton said those receiving jobseeker benefits might still be employed, even if they were only working for one hour per week. Additionally, not all people who were unemployed were on a jobseeker benefit.
"At the end of June, there were around 39,000 more recipients of jobseeker support than at the end of March, but jobseeker support recipients are not necessarily unemployed," he added.
During COVID-19 lockdown, the unemployment rate was just under 3 percent. Moving through alert levels 3 to 1, the level of unemployment rose, landing at nearly 5 percent.
"During the June 2020 quarter, some people weren't actively seeking work due to the COVID-19 lockdown. Near the end of the quarter, the unemployment rate may have increased because more people sought work as New Zealand moved down the alert levels and restrictions were eased," Broughton added.
Ahead of the official release, Kiwibank chief economist Jarrod Kerr said the "vast range of unemployment picks" for the June 2020 quarter highlighted the level of uncertainty.
ANZ chief economist Sharon Zollner said the bank's current unemployment forecast was for the rate to peak at 10.6 percent in the December 2020 quarter.
Immediately following the global financial crisis (GFC), Statistics New Zealand household labour force data shows unemployment reached 6.5 percent in the December 2009 and June 2010 quarters. It reached it's highest point, 6.7 percent in the September 2012 quarter.
Since records began, in the December 2007 quarter, unemployment was at its lowest point, at 3.3 percent. The highest unemployment rate on record was in the September 1991 quarter, when it was 11.2 percent.