Businesses maintain they're under pressure despite decreasing unemployment
New Zealand's unemployment rate slid to 5.3% in the March quarter, according to new data, as businesses maintain that they are under pressure amid ongoing uncertainty.
The latest data from Stats NZ revealed that the unemployment rate went down to 5.3% in March 2026, down from the 5.4% in the December quarter, but remains above the 5.1% in the same period last year.
There were 163,000 unemployed people in the March 2026 quarter, slightly lower than the 165,000 unemployed people in the December quarter.
The underutilisation rate, a broader measure of the untapped labour market capacity, remained at 12.9%, with 406,000 underutilised people, according to Stats NZ.
Businesses under pressure
Alan McDonald, Head of Advocacy at the Employers and Manufacturers Association (EMA), said the drop in unemployment is good news for the economy.
However, he noted that businesses remain under pressure amid uncertainty due to geopolitical instability and rising fuel costs.
"We are hearing firms are looking at delaying investment decisions, parking up equipment, and possibly delaying the start of projects as they await greater certainty," the EMA official said in a statement.
Previous findings from the New Zealand Institute of Economic Research (NZIER) revealed that nine per cent of companies in the country have reduced staff numbers in the March quarter, while another five per cent are planning to cut staff in the next one.
The NZIER's poll, which was carried out shortly after the Middle East crisis erupted, found that business confidence plunged with only one per cent of firms expecting better general conditions over the coming months.
"The recent developments with the Strait of Hormuz shipping restrictions and fuel price surge have increased caution amongst firms, as reflected in firms' hiring and investment intentions," the NZIER report read.
Youth unemployment up
Meanwhile, the strain on employers is hitting New Zealand's younger workers the hardest, according to the EMA.
The proportion of youth not in employment, education, or training increased to 14.4% in the March quarter, up from the 13.3% in the previous one.
"The number of 18 to 24-year-olds unable to find work is deeply worrying," McDonald said. "In some regions, those figures are well into double digits."
The EMA official said the situation comes amid weaknesses in sectors that traditionally provide entry-level opportunities, such as construction, manufacturing, and distribution.
"These are exactly the industries that tend to absorb young and lower-skilled workers when the economy is growing," he said.
Nick Tuffley, chief economist at the ASB, told Midday Report that the high level of youth unemployment reflects the challenges they face in the jobs market.
Tuffley added that the conflict in the Middle East will continue affecting hiring sentiment among employers.
"We do see a slight drift up in unemployment, we do expect a dip in employment in the middle parts of this year just as we face the initial hit from higher fuel bills on households and a bit of business caution in the short term," he said as quoted by Radio New Zealand.
