ANZ expects this year to end with an extra 27,000 people out of work - but says the situation could have been a lot worse.

Senior economist Miles Workman said in the third quarter, there were around 12,000 fewer people employed compared to a year period and this would likely rise to 27,000 by the end of December.

The unemployment rate lifted to 4.8 per cent in September and Workman expected it to reach 5.1 per cent in the following quarter.

He said there was also growth in the working age population and changes in the participation rate.

Workman said more people would continue to lose jobs through the start of next year before unemployment bottomed out around the middle of 2025.

"That's a typical lag between economic activity and the labour market."

But he said forecasts for unemployment were now lower than they had been.

"The Reserve Bank's forecast peak is 5.2 per cent and our forecast peak is 5.5 per cent. Relative to previous economic cycles, the unemployment rate has been more than double that."

He said while it was "not a good news story by any means" and a lot of households would struggle this Christmas, if inflation could be tamed with an unemployment rate of 5.5 per cent or less, "it could be worse".

"It has been worse in the past.

"We're coming off an extraordinarily over-stimulated economy where the Government spent way too much money and everything was on a huge sugar rush. It's inevitable it had to come down off that to put the economy on a sustainable path. IF you hit the cookie jar forever, it's not a sustainable diet."

He said there were already some indications of "green shoots" in economic activity.

"They have to emerge and come to fruition, then we'll see that impact on the labour market."

Susan Edmunds/RNZ