The Iran conflict has pushed job security fears to levels not seen since the survey began
New Zealand workers are more worried about their jobs and incomes than at any point since the Westpac-McDermott Miller Employment Confidence survey began in 2004 — and for the first time in the survey's history, expectations for future earnings growth have also hit a record low, according to the latest results released today.
The Employment Confidence Index fell 12.5 points to 83.1 in the June quarter — the lowest reading in the survey's 22-year history. The decline was broad-based, affecting all regions, age groups and income levels, with the drop in confidence tracked directly to the economic disruption caused by the Iran conflict and the surge in fuel prices that followed.
Westpac senior economist Michael Gordon, who authored the report, noted an important timing caveat: the June survey was conducted in early June, just before the US-Iran peace deal and the largest of the recent declines in fuel prices. The March survey, meanwhile, was held at the very beginning of the conflict, before most households had registered the full impact. That timing gap means the survey captures the peak of anxiety rather than any subsequent recovery in sentiment.
Regardless of the timing effect, the underlying conditions are deteriorating. The confidence collapse arrives against a deteriorating growth outlook — Westpac forecasts New Zealand's economy will expand just 1.4% in 2026, well below average, with unemployment expected to peak at 5.6% by year end.
Job opportunities near GFC lows
The survey's job opportunities measure deteriorated sharply, with a net 60% of respondents saying it is hard to find work — the weakest reading since the mid-2010s. Looking further out, expected job opportunities in a year's time fell to a net negative 30%, approaching the lows recorded during the 2008 Global Financial Crisis.
Earnings expectations at an all-time low
The earnings picture is the most striking finding for advisers focused on borrower serviceability. Only a net 3% of households reported a rise in earnings over the past year, down from 14% in March — close to the lows recorded during the Covid lockdown. More significantly, expected earnings growth for the year ahead dropped to a net 12% — the lowest reading in the history of the survey, surpassing even the lows of previous downturns.
Westpac's analysis suggests households are assessing earnings in real terms — measuring whether pay is keeping pace with rising costs rather than tracking nominal income changes — which explains why the fall has been so sharp so quickly.
North Island leads the decline — two regions hold steady
The confidence decline was more pronounced in the North Island than the South Island, with Auckland, Waikato and Gisborne/Hawke's Bay recording the sharpest falls across all survey measures. Westpac attributed this to stronger economic conditions across much of the South Island providing a buffer against the shock.
Two regions bucked the national trend. Taranaki/Manawatu-Whanganui and Nelson/Marlborough/West Coast recorded employment confidence broadly unchanged for the quarter, with resilience largely seen in the expected earnings component.
For advisers, the practical read is a more cautious borrower — less likely to stretch capacity, more likely to favour shorter fixed terms and conservative loan structures. The employment data does not stand alone — the companion Westpac-McDermott Miller Consumer Confidence Index fell to 80.4 in the June quarter, a three-year low, with mortgage holders among the most pessimistic groups surveyed.
Read the full Westpac report for more information.
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