Prime Minister John Key believes economic confidence is picking up as unemployment drops.
New figures show the number of people on all benefits fell by nearly 10,816 over the last month, including 4224 people who came off the unemployment benefit.
Sceptics have warned the the reduction could be attributed to seasonal trends and short term government schemes.
But Key says employers are starting, cautiously, to take on new people.
He says the figures are a good sign for the economy, but it is still a one step at a time situation.
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