Official figures show the number of people out of work has fallen dramatically in the first three months of this year.
Once seasonal factors are accounted for, the unemployment rate fell from 7.1% to 6% during the period, Statistics New Zealand Household Labour Force Survey shows.
It is the biggest drop since the survey began in 1986.
Seasonally adjusted unemployment fell by 25,000 - the first fall in the numbers out of work in two years.
The number of people in jobs rose by 22,000 while the number no longer looking for work fell by 3000.
On an actual basis, the number of people out of work fell by 15.1% to 140,000.
Hours worked rose by 1.7% and the participation rate, which measures the proportion of people in jobs or looking for work, held steady.
Dollar, interest rates up
The dramatic fall in the rate of unemployment pushed up the New Zealand dollar and interest rates on Thursday.
The Kiwi made back much of its recent losses after investors bet on a June rise in the Official Cash Rate.
Upbeat comments from the Reserve Bank governor sent pulses on the financial markets racing in the morning. But the biggest quarterly fall in the official unemployment rate in decades sent traders into overdrive.
The New Zealand dollar gained 1 cent against the US dollar after it emerged that unemployment fell to 6% at the end of March.
At 5.20pm on Thursday, the dollar was buying 72.70 US cents, 80.35 Australian cents, 48.12 pence, 68.30 yen and 0.5670 euro. The Trade Weighted Index was at 68.84.
Markets had been expecting the unemployment rate to remain steady or fall slightly from its peak of more than 7%.
Thursday's developments indicate that a rise in the Official Cash Rate in June is almost guaranteed. Interest rates for 90-day bills, which determine banks short-term borrowing costs, rose to a four-month high in response.
Economy back on track - PM
Prime Minister John Key says the big drop in the number of people without a job shows the Government has got the economy back on track.
Mr Key says while there is always volatility in the figures, the unemployment trend is moving in the right direction.
"And the second thing I think is it does show that the Government's policies are working and that we haven't blown the bank by having an enormous budget deficit relative to other countries.
"We have had targeted programmes, I believe, that have worked and we've now got the economy back on track."
Mr Key says the Budget on 20 May will buttress its policies around economic growth.
Westpac economist Dominick Stephens says the figures are much better than anyone had expected.
"We haven't seen a decline in unemployment in a single quarter like this for probably a lot longer than the 1986 start of the Household Labour Force Survey. The reason is the New Zealand economy is well on the way to a rapid recovery."
Mr Stephens says recent rises in export prices have finally given businesses the confidence to begin hiring workers again.
But National Distribution Union spokesperson Robert Reid says the economy is still very fragile.
He says the union had four companies on Thursday telling them that they would either have to put workers on a shorter week or have redundancies.
