Job Market Struggles: Construction Sector Loses Over 12,000 Jobs, Youth Unemployment Rises

By John Weekes | Senior Business Reporter | 28 July 2025

Latest employment data from Statistics New Zealand paints a troubling picture for the labor market, with the construction sector shedding more than 12,000 jobs in the past year and youth unemployment rising sharply. The figures highlight deepening challenges for young workers and underscore the growing concerns of economists and analysts about the nation’s economic outlook.

Westpac senior economist Michael Gordon pointed out that the current labor market has shifted dramatically from the tight conditions seen just a couple of years ago. With the return of international borders and the arrival of migrants, the economy has faced a slower post-pandemic recovery, leading to a more competitive job market. Young workers, in particular, are increasingly finding themselves at the front line of layoffs and struggling to re-enter the workforce once they’ve fallen out.

According to the latest data, filled jobs for individuals aged 15 to 19 have dropped by 10% year-on-year, while the number of people aged 20 to 34 in work has also declined. In contrast, those aged 35 to 39 have seen a 2% increase in filled jobs. Gordon noted that the trend of longer unemployment spells is becoming more pronounced, with many individuals facing a difficult path back to employment after being out of work for six months or more.

Economist Susan St John, from the University of Auckland Business School, raised concerns about the adequacy of current support mechanisms for the unemployed. She emphasized that while short-term unemployment can be managed, the lack of sufficient fiscal cushions could have disastrous consequences in the event of a prolonged economic downturn. St John also highlighted the impact of restrictive government fiscal policy on demand, which has contributed to the decline in young adults filling jobs.

Although the overall number of filled jobs across all industries increased by 0.1% in the most recent month compared to the previous one, the construction sector has been hit particularly hard. Filled jobs in construction were down 6% or 12,169 jobs compared to June 2024, while manufacturing lost 2.5% or 5,850 jobs year-on-year. Gordon attributed the drop in construction jobs to the sector’s cyclical nature and sensitivity to interest rates. He noted that housing consents have stabilized over the past year, suggesting that a recovery in construction jobs may be a few months away.

Regional disparities have also been a key factor in the employment landscape. While the North Island continues to face challenges, the South Island has seen more stable conditions, partly due to the strong performance of the agricultural sector. Gordon added that feedback from customers and colleagues often highlights stark differences between regions, with the South Island expressing a more positive outlook compared to the North.

Seek’s June employment report further confirmed the challenges facing the job market, with job ads down 3% compared to May and 3% down from the same period last year. However, some regions—such as Gisborne, Marlborough, and Southland—have seen an increase in job advertisements. Seek NZ country manager Rob Clark noted that while overall job ad levels remain below pre-pandemic levels, there are pockets of growth that offer some optimism for the future.

The data underscores a complex and evolving labor market, with significant implications for both individual workers and the broader economy. As the nation continues to navigate the post-pandemic landscape, the need for targeted support and policy adjustments becomes increasingly clear.

John Weekes is a business journalist who covers a range of topics including aviation, consumer affairs, and court reporting. He has previously covered politics and crime.