The labour market continued to tighten in the final months of 2021, despite disruption caused by the delta outbreak, with the unemployment rate down to a record low 3.2% in the December quarter.
Unemployment for the September quarter was also revised down to 3.3% from 3.4%.
The previous lowest unemployment rate ever recorded was 3.4% in December 2007.
The cost of labour also increased slightly, with the Labour Cost Index up 2.6% in the 12 months to December 2021.
Private sector wages were up 2.8%, the highest increase in 12 years.
Despite this real wages fell in 2021, with prices (as measured by CPI inflation) increasing at twice the rate of wages in 2021.
Kiwibank economists said wage increases tend to lag the economy and falling real wages combined with labour market tightness were a recipe for more wage inflation later this year.
"Wage growth will continue to rise over much of this year. We see wage growth reaching 3.6% by the end of 2022," they said in a note.
The last time unemployment was this low in Dec 2007 wage inflation peaked at 4% nine months later in September 2008.
