The state of the labour market will be in focus this week as figures on employment levels and wages are released.
Westpac is predicting the unemployment rate for the second quarter will jump to 5.7 in the June quarter, the biggest quarterly increase in 18 years.
Westpac's labour market economist Dominic Stephens says wage growth will also continue to slow.
Mr Stephens says while there are positive signs, unemployment figures tend to rise strongly, late in a recessionary cycle.
He says as New Zealand went into recession in 2008 there was a very tight labour market, which meant that a lot of people who were laid off from jobs were able to find work in other industries.
But Mr Stephens says as the recession has intensified people who have been laid off have not been so lucky and more of them have ended up in the dole queues.
For that reason, he says unemployment rises are strongest late in the recession.
Mr Stephens says the forecast is for unemployment to rise to about 6.8% at its peak in this cycle in mid-2010.
