Economists have greeted today's drop in unemployment to 6.9 per cent - from a previous 7.3 per cent - with scepticism, saying the historic data is hard to interpret but, overall, points to a weak labour market.
''While somewhat sceptical over elements of today's release, the message is clear: the labour market is weak. This confirms that the Reserve Bank will not be raising the OCR [from 2.5 per cent] for quite a while despite a lively housing market and rising credit growth,'' ANZ economists said.
The lower-than-expected unemployment number was due to a big drop in the percentage of people either in work or looking for work - the participation rate - according to the Statistics New Zealand data.
But ANZ said that fall ''looks likely'' to partially reverse early this year ''raising the risk of a spike up in the unemployment rate''. They called the 6.9 per cent headline figure a red herring.
TD Securities head of Asia Pacific research, Annette Beacher, went further and calculated that the unemployment rate 'would have jumped to 8.3 per cent' if the participation rate had not fallen.
That said, she is forecasting unemployment to ease towards 6.25 per cent by the end of the year and to fall to 5.50 per cent by the end of 2014 but said ''a lot of finger-crossing is required between now and then''.
''A point of frustration is that there are multiple sources of high frequency data available on house prices, but yet there is only one quarterly and highly unreliable survey on employment, arguably one of the most critical variables when attempting to assess the correct stance of monetary policy. More funding for statistics please,'' Beacher said.
Wellington regional unemployment hit an 18-year high in the December quarter, according to Statistics NZ.
The Wellington region's unemployment rate has worsened sharply to 7.9 per cent in the December quarter, from 7.1 per cent in the September quarter.
Wellington unemployment was last this bad in September 1994, when it hit 8 per cent.
The unemployment rate in the region is now much higher than the national average which has improved to 6.9 per cent, from 7.3 per cent in the September quarter.
Statistics New Zealand figures out this morning show 22,600 people were unemployed in the Wellington region in the December quarter, compared with 21,000 in the three months to September.
Those in employment dropped from 273,200 in September to 262,600 in December, a fall of 11,000 in just three months.
There was also a rise in the numbers of people not in the workforce - either in work or looking for work.
The unemployment rate in Manawatu/Wanganui worsened slightly in the December quarter to 8.5 per cent. Gisborne and Hawke's Bay regional unemployment eased slightly to 8.6 per cent in final quarter of 2012.
Taranaki remained one of the strongest job markets, with unemployment of just 5.1 per cent. Canterbury was also strong with unemployment of 4.9 per cent.
Auckland unemployment improved sharply, down from 8.6 per cent to 7.2 per cent in the December quarter.