With economic indicators being central to the return of a thriving employment market, we take a look at the current landscape – during the depths of winter, early July 2o25.

The Reserve Bank’s decision today to hold the Official Cash Rate at 3.25% marks an important signal of stability in the current economic environment. While much of the commentary continues to focus on slowing job growth and easing wages, there are underlying signs of resilience emerging in the labour market.

Kiwibank’s latest analysis points to employment beginning to stabilise. While some sectors – particularly construction – have seen softening, others such as the primary industries are continuing to grow, demonstrating the value of diversification across New Zealand’s economy. This suggests we may now be seeing the low point of this labour cycle, with conditions set to gradually improve.

Wage pressures have eased, which has provided some much-needed breathing room for businesses and households alike. This also gives policy makers space to support longer-term recovery, while allowing employers to take a more deliberate, forward-looking approach to workforce planning.

BNZ’s latest market outlook echoes this view.

While soft conditions are expected to linger in the short term across most sectors, the building blocks for recovery are starting to become visible. As local interest rate relief finally starts to flow through the market, there is potential for stronger employment growth and improved productivity later in the year.

Importantly, there are broader signals that New Zealand’s economic landscape is beginning to shift toward recovery. Stats NZ data shows that investment in New Zealand has increased for the first time in 13 quarters.

In the March 2025 quarter, income earned on foreign investment rose by $187 million to reach $7.3 billion , driven by increases in both direct and portfolio investments. This upturn in investment signals growing confidence in New Zealand’s economy, following what we all know has been a very tough recession. The Treasury also points to a lift in export performance, reinforcing the view that conditions are slowly improving.

And when conditions improve, and investment commences, the first thing typically invested in, is people.

Agriculture and automation-focused industries remain bright spots. Investment in innovation will continue to create efficiencies, generating new roles, and lifting confidence within key sectors. Emerging skills and new roles will appear, and recovery will happen.

Key themes:

• Early signs of stabilisation in employment, particularly outside the most cyclical sectors.

• Easing wage growth creating room for longer-term workforce planning and investment.

• Resilience continuing in the primary sector and automation-related industries.

• Interest rate settings are now more supportive of a gradual recovery in employment and productivity.

• Rising foreign investment and stronger export performance signal growing economic confidence.

• Both Kiwibank and BNZ expect improving labour market conditions into 2026.

This is a labour market that is adjusting – absorbing change and preparing for what’s next for Aotearoa NZ.

For employers and workers, the focus remains on adaptability, resilience, and readiness for the opportunities that will present themselves in the next period.

While caution remains, optimism builds. And we’re here for it.

Sources:

• Kiwibank Economics, “The Catch-Up Continues” and “Charts of the Week: Job Growth Flattening at Cycle Lows”, July 2025
  https://www.kiwibank.co.nz/business-banking/thrive-hq/kiwi-economics/commentary-insights/

• BNZ Markets Outlook, June 30, 2025
  https://www.bnz.co.nz/assets/markets/research/BNZMO_20250630.pdf

• Stats NZ, Balance of Payments and International Investment Position, March 2025
  https://www.stats.govt.nz/information-releases/balance-of-payments-and-international-investment-position-march-2025-quarter/

• Reserve Bank of New Zealand Monetary Policy Statement & OCR Announcement, July 2025
  https://www.rbnz.govt.nz/

• The Treasury, Economic Update, June 2025
  https://www.treasury.govt.nz/