High unemployment comes after 'difficult months' for employers
New Zealand's unemployment rate hit an 11-year high after reaching 5.6% in the second quarter, a period the government said reflected "difficult months" for employers.
The unemployment rate went up to 5.6% in the June 2026 quarter, increasing from the 5.4% in the previous March quarter, according to data from Stats NZ.
This is also the highest unemployment rate recorded in the country since September 2015, when it hit 5.7%.
The latest Stats NZ data showed that there were 166,500 people who were unemployed in the June 2026 quarter (not seasonally adjusted), including 19% who had been unemployed for more than a year.
The underutilisation rate, which covers unemployed people, the potential labour force, and people who are underemployed, also rose to 13.8% in the June quarter, up from the 12.9% in the March quarter.
'Difficult months' for employers
Finance Minister Nicola Willis said the data reflected the challenges faced by employers during the second quarter of the year.
"April, May, and June were difficult months for many employers. They faced real uncertainty and rising costs, and a lot of them made the hard call to hold off on hiring or expanding," Willis said.
The Employers and Manufacturers Association (EMA) agreed that uncertainty prompted many businesses to be cautious in hiring.
"Many businesses have been focused on retaining the staff they already have rather than taking on new employees," said Alan McDonald, head of advocacy at the EMA.
"For some firms, higher costs, weaker demand, and global uncertainty have meant delaying investment decisions and being much more cautious about growth."
One of the major challenges faced by employers during the quarter was the conflict in the Middle East, which prompted sharp movements in global oil prices, according to McDonald.
"Fuel, transport, and input costs matter enormously to New Zealand businesses. The volatility we saw during the quarter affected confidence, investment decisions, and hiring intentions," he added.
Improving business confidence
McDonald said restoring business confidence is critical in order to lift the labour market, as recent data shows that employers are still looking for opportunities to grow when conditions improve.
"Businesses want to invest, grow, and create jobs. If uncertainty eases and confidence continues to improve, we would expect hiring intentions to strengthen over the coming months," he said.
Meanwhile, Willis said the government is already putting its focus on policies that will boost the economy and build business confidence.
"Because confident businesses are the ones who hire people and grow their operations – and it's encouraging to see recent jumps in business confidence and hiring intentions," the finance minister said.
Among the steps the government is taking include backing the tourism and international education sectors to keep growing, fast-tracking major construction projects, and investing in the infrastructure that the country needs, according to Willis.
The government also unveiled last year a major tax incentive, known as Investment Boost, aimed at encouraging businesses to invest, grow the economy, and lift wages.
"None of this is about quick fixes. It's about giving employers the confidence to say yes to that next hire, that next expansion, that next investment. That's how you turn a tough quarter into a recovering economy," Willis said.
