Further downward revisions likely
New Zealand’s labour market remains subdued, with the latest Monthly Employment Indicator (MEI) showing only a modest uptick in job numbers – and economists warning the figure is likely to be revised lower.
Westpac senior economist Michael Gordon (pictured right) said filled jobs rose just 0.1% in May, following a downwardly revised 0.3% fall in April. 
“That was a little better than had been signalled by the weekly snapshots provided by Stats NZ, which had suggested a softer result,” Gordon said. “That said, this measure tends to be revised down from its initial release, so we suspect that it will end up as a slight negative for May.”
Job losses persist in construction and business services
The MEI data revealed ongoing sectoral differences.
“Construction and business services continue to see the biggest job losses, while public services (including health and education) and financial services are gradually rising,” Gordon said.
He added that the broader employment trend points to a likely lift in the unemployment rate.
“The results so far for the June quarter are consistent with a modest fall in the HLFS employment measure, consistent with our forecast that the unemployment rate will rise from 5.1% to 5.3%,” Gordon said.
ASB flags risk of further downward revisions
ASB senior economist Mark Smith (pictured right) echoed concerns about revisions. 
“We expect the May print to be revised lower and the downward sequence of revisions shows few signs of abating,” Smith said.
May’s 0.1% lift in filled jobs followed weaker figures in previous months, with jobs down 0.2% in the three months to May and 1.5% lower year-on-year.
“Given that we expect flat hiring in June, the filled jobs data points to some downside risk to our Q2 HLFS employment pick (flat) and potentially some upside risk to our 5.2% unemployment rate forecast,” Smith said.
Primary sector shows resilience, but impact limited
“Primary sector filled jobs rose 0.4%, which followed downwardly revised falls in April,” Smith said.
Annual employment in the sector was up 1.1%, aided by rising commodity incomes.
However, “Primary sector filled jobs were only about 5% of total employment, so improvements here would need to be stark to have a meaningful impact on the overall figures,” Smith said.
Services sector dragged down by admin job losses
“Jobs in the employment-rich services sector (about 75% of total filled jobs) rose 0.1% but this followed a 0.2% April fall,” Smith said.
The sector was down 0.2% over the three months to May and 1% annually. Administration and support services were hit hardest, with a 5.6% drop year-on-year.
Goods sector slump led by construction and manufacturing
The goods-producing industries continued to weigh on the job market.
“Employment in the goods sector has retained its place as the soft spot for the NZ labour market, with a 0.2% decline in May (-4.0% yoy),” Smith said.
Construction employment fell 6.2% over the year, while manufacturing dropped 2.1%.
Youth, men, and key regions facing bigger employment declines
Young workers were disproportionately impacted.
“Heavy annual falls were evident for the 15-19 age bracket (-9.9% y/y), with hiring down 3.8% y/y for those aged 20–24 and down 4.4% y/y for the 25-29 age group,” Smith said.
He also pointed to geographic disparities: “Annual falls were large in Auckland (-1.9% y/y) and Wellington (-2.2% y/y), but falls were also evident in some regional North Island centres...”
By contrast, South Island centres like Canterbury and Otago saw smaller declines.
Outlook: Anaemic hiring and possible OCR cut
Looking ahead, Smith said the outlook remains uncertain.
“We expect hiring to remain anaemic over much of 2025, with firms likely to remain gun shy on expansion plans given the uncertain environment,” he said.
“The cooling labour market should help cap pressures on core inflation, but the RBNZ will be somewhat wary over the high near-term inflation outlook.”
ASB continues to expect a further easing in monetary policy.
“We expect a further 25bp OCR cut before year end (3.00% OCR) as the RBNZ shifts from the policy brake to the accelerator to support the economy and labour market... but OCR cuts from here are not a certainty,” Smith said.
