A single quarter wiped out the recovery
The Westpac-McDermott Miller Employment Confidence Index fell 12.5 points to 83.1 in the June quarter, the lowest reading since the survey began in September 2004. In March, it sat at 95.6, the highest since early 2024. That is not a gradual deterioration. That is a cliff.
A net 60% of respondents said it is hard to find a job, up from 46% in March. Expected job opportunities in a year fell to a net negative 30%, approaching the lows recorded during the Global Financial Crisis. Workers’ perceptions of their own job security fell 15.2 points to minus 9.6, the weakest since the Covid lockdown.
The Iran conflict clearly amplified the damage. Westpac senior economist Michael Gordon notes the survey timing caught peak anxiety: “The previous survey was held in the early part of March, at the beginning of the Iran conflict and likely before households had recognised the consequences. Similarly, the latest survey was held in early June, just before the US-Iran peace deal.” True sentiment probably sits somewhere between the two readings. But on NewstalkZB, Gordon was blunter: “Employment confidence has been weak over the past five years, and this data represents another step backwards.” The geopolitical shock accelerated a pre-existing trend. It did not create it.
The earnings number that changes the hiring equation
Most coverage will focus on the headline index. The number that should command attention in boardrooms is this: expected earnings growth for the year ahead dropped to a net 12%, the lowest reading in the survey’s entire history. Only a net 3% of households reported actual earnings growth over the past year, down from 14% in March.
Workers have stopped expecting pay rises. That is a structural shift, not a survey blip. In the tight labour market of 2021 to 2023, employees demanded flexibility, purpose, above-inflation raises. In this market, the dominant motivation is security. Keeping the job you have, or finding one that feels stable.
For employers, that changes three things immediately. Retention risk has dropped. Workers are less likely to leave voluntarily, so if your attrition rate is still high, the problem is your workplace, not the market. Hiring leverage has shifted. Candidates are more willing to accept offers, and businesses still running 2022-era recruitment processes with lengthy timelines and heavy perks pitches are wasting money. And wage pressure has eased meaningfully, though employers who freeze wages entirely will lose their best people when conditions eventually turn.
The hard data backs the sentiment
The confidence collapse aligns with the underlying labour market. MBIE’s March 2026 snapshot shows unemployment at 5.3%, underutilisation at 12.9%, and the employment rate down to 66.7%. Stats NZ’s April employment indicators show filled jobs up a modest 0.2%, with manufacturing shedding 3,238 jobs year-on-year. Job ads have technically recovered, with online listings up 11.8% year-on-year in March, but they remain down 36.4% over three years. The recovery is real but fragile, and the June confidence collapse suggests it may stall.
Gordon forecasts unemployment will reach a cyclical peak of 5.6% by the end of 2026. Regionally, Northland is the most pessimistic at 73.7, while the biggest falls hit Gisborne/Hawke’s Bay, Waikato and Auckland. The public sector fell further than the private sector, likely reflecting ongoing government restructuring.
Waiting for certainty is its own risk
Alan McDonald, Head of Advocacy and Strategy at the Employers and Manufacturers Association, puts the business reality plainly: “We’re hearing about machinery potentially being parked up, projects being deferred, and decisions being pushed out while businesses wait for greater certainty.” He warns that continued restraint in investment and hiring decisions is the likely outcome if input costs stay elevated.
That caution is understandable. It is also dangerous. Businesses that deferred hiring after the Covid shock found themselves desperately understaffed when demand returned, paying inflated wages to attract talent they could have locked in cheaply months earlier. The same trap is forming now.
The peace deal may lift sentiment in the September quarter. It will not fix the structural softness. Five years of weak employment confidence, unemployment heading to 5.6%, workers who have stopped expecting raises. This is not a temporary blip. It is a market that has repriced what employment means. Employers who recognise that shift and act on it, adjusting hiring processes, locking in good people, investing while competitors hesitate, will come out of this cycle ahead. Those still waiting for a signal should know the data just gave them one.
Sources
- Employment confidence falls to lowest level in 22 years (2026-06-23)
- Westpac-McDermott Miller Employment Confidence Index sinks to new low amid Middle East conflict (2026-06-23)
- Employment confidence drops to lowest level since 2004 – report (2026-06-23)
- Westpac McDermott Miller Employment Confidence Index, June 2026 (2026-06-23)
- NZ employment confidence hits record low — and borrowers are feeling it (2026-06-23)
- Employment indicators: April 2026 (2026-04)
- Westpac McDermott Miller Employment Confidence, March quarter 2026 (2026-03-25)
- GDP growth reflects earlier recovery, but impact of global uncertainty still to come (2026-06)