New data from Employment Hero shows New Zealand’s small and medium business sector continuing to add headcount in May, even as wage growth stalled completely on an annual basis, highlighting a labour market where businesses are growing cautiously rather than competing hard for talent on pay.
The Employment Hero Jobs Report, which draws on data from more than 2,000 businesses and 85,000 employees, shows SME employment growth was up 0.5 percent in May compared to April. That continues a recent run of modest monthly gains, following increases of 0.5 percent in April, 0.7 percent in March and almost 1.0 percent in February.
James Keene, Employment Hero’s Managing Director for APAC, says it reflects a labour market that’s still finding its footing. “SME owners are operating in a margin-squeezed environment, focused on meeting customer demand without significantly increasing labour costs or risk,” he says.
The growth comes despite Stats NZ figures showing unemployment hit 5.3 percent in the March quarter, a reminder that the broader economic picture remains mixed even as SME hiring data points modestly upward.
While wages crept up 0.5 percent month-on-month in May, continuing a three-month trend, annual wage growth fell to zero, a 13-month low and a steep drop from 4.0 percent growth recorded at the same time last year.
Keene says the flat wage figure shouldn’t be read as the full story of how SMEs are treating their teams. “What we consistently see is that SME owners find other ways to retain their people, such as flexibility, culture and career development,” he says.
“The wage number is significant, but it doesn’t tell the whole story of how these businesses are looking after their teams.”
Growth wasn’t even across the board. Accounting, HR and legal businesses were among the strongest performers, alongside manufacturing and agriculture, with year-on-year employment growth averaging 12.3 percent across the three sectors.
Healthcare and community services posted the strongest annual growth at 14.1 percent, while retail, hospitality and tourism grew 11.5 percent year-on-year. Manufacturing, transport and logistics also performed strongly, with headcount up 3.2 percent month-on-month and 5.6 percent year-on-year, alongside wage growth of 3.5 percent compared to the same time last year.
Construction and trades remained the clear outlier, with headcount down 1.5 percent month-on-month and 0.8 percent year-on-year as the building downturn continued. Keene frames this as cyclical rather than structural. “Construction is cyclical by nature. It has booms and downturns, and as building activity and major projects begin to ramp up again, we would expect to see a recovery,” he says.
“Our data shows SMEs broadly are continuing to grow headcount, and with a positive GDP result there are early signs the economy is moving in the right direction. Construction tends to follow that momentum.”
James Keene is MD APAC at Employment Hero.
There was also a bounce-back for younger workers, with employment in the 18-24 age bracket up 1.8 percent month-on-month after a dip the previous month, though wage growth for this group slipped -0.9 percent over the same period.
One sector bucking concerns about AI-driven job losses is accounting, HR and legal, where headcount continued to grow even as AI tools become more embedded in day-to-day work. Keene points to recruitment as one example of where AI is creating efficiencies without cutting roles.
“Many small businesses are currently overwhelmed with applications while candidates are waiting longer than ever to hear back,” he says.
“AI is helping resolve that bottleneck.” Employment Hero’s own Recruitment Agent tool, which automates first-round candidate screening while keeping final hiring decisions with humans, has reportedly reduced screening time by up to 46 percent, with more than 2,500 Recruitment Agent interviews conducted in April alone.
Keene says employers are increasingly looking for candidates who can work alongside AI tools rather than be replaced by them.
“We’re seeing demand across all industries for candidates who can demonstrate AI skills alongside more traditional competencies,” he says.
“The data reflects AI augmenting these roles, not eliminating them.”
