The official unemployment rate has risen to 5.3 percent in the September 2020 quarter, Statistics New Zealand has announced.
Released on Wednesday, the Household Labour Force Survey for the September 2020 quarter shows the official unemployment rate has increased.
Up from 4 percent in the June 2020 quarter, it's the largest quarterly increase on record.
Compared to the June quarter, the number of unemployed people increased by 37,000 (32.5 percent).
This marks the highest quarterly rise in unemployment since 1986, when records began.
The second-largest rise was during the Global Financial Crisis (GFC), when the number of unemployed people rose by 18,000 in the June 2009 quarter.
Defined as people actively looking for work, the number of unemployed people in the September 2020 quarter is 151,000 (seasonally adjusted).
Statistics New Zealand labour market and household statistics senior manager Sean Broughton, said the rise in unemployment reflects the COVID-19 recession, including impacts of border and business closures.
"One hundred and fifty one thousand is the highest number of unemployed people we have seen in eight years," Broughton said.
He said the fall in the unemployment rate to 4 percent in the June 2020 quarter was due to peoples' inability to be 'actively seeking' and available for work during COVID-19 lockdown.
"This quarter's increase in unemployment reflects a return to more normal job hunting behaviours," Broughton added.
Infometrics economist Brad Olsen said although the unemployment rate of 5.3 percent isn't as high as during the GFC (6.6 percent in the Dec 2009/June 2010 quarters), the quarterly rise highlights how fast COVID-19 impacted the economy.
"COVID-19 was an immediate brick bat to the face of the New Zealand economy...it came through very quickly," Olsen said.
Given the widespread effects of the COVID-19 crisis, the September unemployment figures aren't as high as people might have feared.
"They continue to show a more resilient labour market than we might have expected over the last few months," Olsen added.
Hours worked bounced back to near pre-lockdown levels, with 12.6 percent of employed people working less than their usual hours.
The 'underutilisation rate', which measures spare capacity in the labour market, rose to 13.2 percent. It includes people who were underemployed, working less than 30 hours per week with the capacity to work more. The 1.2 percentage point rise indicates businesses were keeping staff on.
"Even if they pay less or have people work fewer hours, those are the areas businesses are trying to focus on, which is where the differences come into play," Olsen added.
Over the September 2020 quarter, the unemployment rate for women increased 5.8 percent, compared to 4.8 percent for men.
Statistics New Zealand labour market manager Andrew Neal said although unemployment rates for men and women rose by similar amounts over the quarter, since the start of COVID-19, women have been worse affected than men.
Between the March and September 2020 quarters, after seasonal adjustments (which smooth typical employment patterns over the year), the number of people in employment fell by 31,000. Of these, over two-thirds (22,000) were women.
"The employment rate for women fell from 62.8 percent to 61.2 percent over the [March to September] period. The rate for men fell from 72.8 to 71.8 percent," Neal said.
Unadjusted figures show there were 24,200 more unemployed females in the September quarter than in the March quarter. Of these, 19,700 came from tourism-related industries: accommodation, transport, travel agencies, sightseeing operators and hospitality.
ANZ senior economist Liz Kendall expected the official unemployment rate to land where it is, at 5.3 percent.
"We expect employment growth to remain weak and that unemployment will eventually peak at 7.5 percent at the end of 2021," Kendall said.
Referring to the drop in employment as "not as negative as we'd expected", BNZ head of research Stephen Toplis said the bank had penciled in a rate above 6 percent. He now expects unemployment to peak at 7.4 percent.
"The balance of risk to this forecast remains heavily weighted to the downside. It is even conceivable the peak ends up with a '6' in front of it," Toplis said.