Confidence weak as hiring slows and pay stalls
The Westpac-McDermott Miller Employment Confidence Index edged up slightly in the June 2025 quarter, but overall sentiment remains weak, particularly regarding future job prospects and earnings growth.
Employment confidence index inches higher but still negative
The Westpac-McDermott Miller Employment Confidence Index rose by just 0.5 points to 88.8 in the June quarter. A reading below 100 indicates more pessimists than optimists.
“The index has been essentially unchanged over the last year and remains close to the lows seen after the first COVID lockdown in 2020,” said Westpac senior economist Michael Gordon (pictured).
This subdued sentiment comes despite the 0.8% March quarter GDP growth released by Stats NZ – the strongest quarterly growth since early 2022.
Job prospects still a major concern
A net 50% of households reported that job opportunities are currently hard to find, a slight improvement from 52% in March but still near post-pandemic lows.
“This measure has tended to be a good leading indicator of the unemployment rate,” Gordon said. “The latest reading is somewhat encouraging in the sense that it suggests the rise in unemployment over the last couple of years is likely to be close to its peak.”
However, expectations for job opportunities in the year ahead fell sharply, with a net reading of -24.6.
“The difficulty of finding work is highlighted by MBIE’s online job advertisements index,” Gordon said. “The number of vacancies has remained at a very low level over the past year, with perhaps the hint of an uptick in the last few months.”
Earnings expectations remain muted
Only a net 3% of households said their earnings had risen in the past year. This follows a sharp drop in the March survey and only a marginal improvement in June.
“Meanwhile, a net 19% are expecting a lift in their earnings over the year ahead,” Gordon said. “This measure was also only marginally higher in June, and has remained at historically low levels over the last year.”
The Labour Cost Index supports this sentiment, showing slowing wage growth and reduced bargaining power.
“One exception to the restraint in earnings is farm incomes, reflecting positive conditions in export markets,” Gordon said.
Job security improves slightly, especially for youth
Concerns around job security have eased, with a net 3% of households expecting less security over the coming year, down from 7% in March.
“The improvement was largely seen amongst younger respondents (under 30), while workers over 50 were feeling less secure,” Gordon said.
Still, the duration of unemployment is rising, with job seekers facing a slower re-entry into the workforce.
“We’re also seeing a rise in the duration of unemployment, as people who find themselves out of work are finding it harder to get back in again, due to the slow pace of hiring,” Gordon said.
Regional results mixed as Southland leads
Regional results were varied. Southland stood out, rising 11 points to 102, making it the only region with average confidence levels. Northland also saw a 10-point gain to 94.
“Strong dairy prices and improving returns for sheep and beef will have provided a boost to incomes more widely across these regions,” Gordon said.
In contrast, other farming regions including the Bay of Plenty, Taranaki and Waikato posted large drops in confidence. Waikato’s decline was particularly sharp, driven by falling reported earnings.
Among major cities, Auckland posted a solid rise in sentiment, while Wellington and Christchurch edged down.
“Wellington remains the most pessimistic part of the country,” Gordon said. “The Monthly Employment Indicator shows that Wellington has seen the biggest fall in the number of jobs over the last year – and that doesn’t appear to be limited to the public sector.”
