The National Party's finance spokesperson Paul Goldsmith doubts "anybody believes" the unemployment rate has dropped to 4 percent because it's "masked" by the wage subsidy scheme.
The unemployment rate fell to 4 percent for the June 2020 quarter down from 4.2 percent in the previous one, quashing widespread expectations for a solid increase due to COVID-19.
It's a major contrast to the Treasury's forecast for the unemployment rate to hit 8.3 percent in June. By comparison, Australia's rate is 7.4 percent, while in the US it's 11.1 percent.
ASB Bank analysts said it reflected a "much smaller-than-expected" drop in employment, although it noted how the lockdown in April and May disrupted how some people were represented in labour market statistics.
It also noted how there are still about 450,000 people on the wage subsidy extension currently due to expire at the end of the month, amounting to a sizeable 17 percent of the labour force, which "suggests further difficulties" ahead.
Goldsmith said on Wednesday he doubted the results.
"I don't think anybody believes that that's the real situation. It's been masked by the enormous amount of people on wage subsidies," he told reporters.
"We've still got 450,000 people on the wage subsidy and the big question is what's going to happen when that finishes? We've got real concerns that many, many more thousands of New Zealanders will be losing their jobs.
"The Government said they're not going to extend it past the current extension but there will be certain areas of the economy, particularly in that tourism space, that will need some form of extra support."
The number of people receiving unemployment benefits is now up to 212,000 - an increase of 67,000 since New Zealand went into lockdown.
Finance Minister Grant Robertson said the data showed the Government's plan to protect jobs and cushion the blow for businesses and households against the economic impact of COVID-19 was the right decision.
"These numbers show that going hard and early to beat the virus works. Being able to reopen our economy sooner has saved jobs. It is proof that getting on top of the virus is the best thing we can do for our economy."
Some of the figures released by Stats NZ reflect a weaker picture of the labour market. Under-utilisation for example, rose from 10.4 percent in Q1 to 12 percent, the largest quarterly increase since records began.
ASB analysts said in the current environment, under-utilisation is probably a better measure of labour market slack than the unemployment rate.
The amount of hours people worked also dropped just over 10 percent quarter-on-quarter, which ASB analysts said was expected, reflecting employed workers being paid to sit at home and "twiddle their thumbs".
"Overall, today's data are certainly welcome to the extent they indicate a stronger-than-expected starting point for the labour market," analysts said.
"However, their use is limited to some extent not only by measurement issues, but also by the fact we know labour market conditions are likely to deteriorate from here."
Robertson acknowledged this.
"We know there are still some tough times to come. The Treasury expects unemployment to rise further and peak in the September quarter as the impacts of the global recession caused by COVID-19 feed through to the domestic economy."
National leader Judith Collins has warned that 400,000 people could lose their job after the wage subsidy extension runs out. She rejected the suggestion she's been scaremongering.
"No not at all. I'm listening to people who are telling me that they're really worried that they're about to lose their jobs when the wage subsidy comes off," she told reporters.
"I think it is utterly irresponsible of a Government to have been paying out the wage subsidy without a plan for what happens when that comes off.
"They've said they're not extending it. They need to front up and tell people what it is they plan to do. It's not good enough - people need to know. Where's the plan?
"We've started outlining some of our plans, where's the Government's? They seem to think they don't need to have any policy."