New Zealand’s labour market has weakened further, with the national unemployment rate climbing to 5.6 percent in the June quarter – the highest level in more than a decade and a stark reminder of the economic pressures facing households across Aotearoa.
New figures released by Stats NZ show an estimated 166,500 New Zealanders were unemployed during the quarter, up from 5.4 percent in the previous three months and above economists’ expectations. It is the highest unemployment rate recorded since 2015 and reflects a labour market that continues to soften despite modest employment growth.
While the number of people in work increased by around 13,000, the labour force grew even faster as more New Zealanders entered or returned to the job market looking for employment. That meant the number of people unable to find work also increased.
The figures also show the underutilisation rate – which includes unemployed people, those wanting more hours, and others available for work – rose to 13.8 percent, highlighting continued pressure beyond the headline unemployment figure. Annual wage inflation also eased to 2.0 percent, suggesting pay growth is slowing as the labour market weakens.
The latest data is likely to intensify political debate as New Zealand heads toward the general election.
The Government has argued the economy is beginning to recover after a prolonged period of high inflation and elevated interest rates, while opposition parties have pointed to rising unemployment as evidence that many families are yet to feel the benefits of improving economic conditions.
For Māori communities, the figures are likely to be particularly concerning. Historically, Māori unemployment has tracked above the national average during economic downturns, with regional communities often experiencing the effects of slowing economic activity first.
Employment advocates have warned that prolonged periods of unemployment can have lasting impacts on whānau, affecting income, housing security, mental wellbeing and opportunities for rangatahi entering the workforce.
Economists say the Reserve Bank will also be watching the data closely. A softer labour market could strengthen expectations of further interest rate reductions aimed at supporting economic activity, although inflation remains an important consideration in future monetary policy decisions.
While some sectors continue to report skills shortages, the overall picture suggests businesses are becoming more cautious about hiring as economic uncertainty persists.
For the more than 166,000 New Zealanders now looking for work, the figures represent more than a statistic—they reflect the daily challenge of finding employment during one of the toughest labour markets in more than a decade.
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