Job vacancies fall as labour market softens

Job vacancies fell by 9,200 (-2.7%) between May and August, reversing last quarter’s gains and underscoring a gradual softening in the labour market, Westpac reported.

“This outcome was notably weaker than our forecast of a 0.5% decline and provides further evidence that the labour market is re-entering a phase of gradual softening,” said Neha Sharma (pictured), Westpac economist.

The vacancy-to-unemployment ratio dropped to 0.51 in Q3, its lowest since early 2021, though still well above pre-pandemic norms. Westpac expects unemployment to edge up to 4.4% by end-2025 and 4.5% by end-2026.

Private sector drives decline

The fall was led by the private sector, where vacancies slid 3.4% in the quarter and 2.6% over the year. Public sector vacancies rose 2.1%, extending a four-quarter run of growth.

Industry data showed 11 of 18 sectors in decline, led by sharp falls in other services (-20.3%), financial & insurance (-15.3%), and mining (-14%). Retail trade (+13.4%), wholesale trade (+11.4%), and manufacturing (+9.7%) bucked the trend, with manufacturing vacancies surging 46% annually.

Broader softening trend

Sharma said the data reinforces expectations of slower jobs growth into 2026. 

“Employment growth has slowed more than expected, and the labour market is gradually shifting lower along the Beveridge Curve,” she said.

The softer trend is echoed across the Tasman. Westpac-McDermott Miller data shows New Zealand’s Employment Confidence Index rose only slightly in Q3, up 1.1 points to 89.9 – still close to post-COVID lows. Two-thirds of respondents said finding a job is hard, the weakest result since 2020, with unemployment forecast to climb to 5.3% this year.

Outlook

Westpac said vacancy levels remain 40–50% above pre-pandemic levels but expects further easing. 

“Sharp declines in vacancies do not necessarily translate into rising unemployment, but as demand cools, we anticipate further downward movement along the Beveridge Curve,” Sharma said.

Read the Westpac analysis here for more details.

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