The unemployment rate has climbed to 5.6% in the three months to June — the highest in 11 years and worse than what economists were expecting.
Figures released by Stats NZ this morning showed the seasonally adjusted rate rose 0.2% from 5.4% in the March quarter — with 171,000 people now out of work, up from 164,000.
The result overshot the 5.4% to 5.5% bank economists had forecast ahead of the release.
Today's data suggests it's the highest unemployment has been since the September 2015 quarter, when the unemployment rate was 5.7%.
The figures drew sharply divided political reaction, with Finance Minister Nicola Willis calling it a "tough" quarter while Labour branded it "a damning verdict" on the Government's economic management.
Stats NZ labour market spokesperson Abby Johnston said underutilisation — a broader measure of untapped capacity that includes the underemployed and those wanting work but not actively seeking it — also jumped.
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"The seasonally adjusted underutilisation rate was 13.8% in the June 2026 quarter, up from 12.9% in the March 2026 quarter," Johnston said.
There were 440,000 underutilised people in the quarter, up 31,000 on March.
Long-term unemployment was also growing. Of the 166,500 people unemployed on an unadjusted basis, 19% had been out of work for more than a year.
"Around 8000 more people were experiencing long-term unemployment in the June 2026 quarter than in the same quarter in 2025."
Unemployment in the North Island rose to 6% from 5.3% a year earlier, while the South Island sat at 3.7%. The unadjusted rate was 11.6% for Pacific peoples and 10.8% for Māori, compared with 4.2% for New Zealand Europeans.
The next labour market release is due on November 4 — three days before the election.
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Finance Minister Nicola Willis said the data confirmed "what many New Zealanders already know from experience," that "the second quarter of this year was a tough one".
"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. Today's data, showing unemployment at 5.6%, reflects that," she said.
"For the New Zealanders who've been out there looking for work in that environment, we know it's been hard going."
Willis said the result was "exactly why" the Government's focus was on lifting business confidence, pointing to recent jumps in hiring intentions.
"To keep our economy growing and creating new jobs, there’s much more to do. That's why we're backing the tourism and international education sectors to keep growing.
"It's why we're fast-tracking major construction projects so the diggers get moving sooner. It's why we're investing in the infrastructure New Zealand needs to build for the future. And it's why we introduced Investment Boost, so businesses have a real incentive to invest in the equipment that leads to productivity gains, helping to create lasting jobs.
"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."
In a statement under National Party letterhead, Willis also took aim at Labour and its potential coalition partners, saying they could not "credibly say jobs are their priority while working against the very policies driving job creation".
She said proposals for "broad new taxes" from Labour, the Greens, Te Pāti Māori and the Opportunity Party would "choke off the recovery we've worked so hard to build".
"And when you look at what Labour is actually offering instead, it doesn't stack up."
But Labour finance spokesperson Barbara Edmonds said the figures were "a damning verdict on Christopher Luxon's economic management".
"Luxon promised he would grow the economy, create jobs, and lower the cost of living. Instead, unemployment continues to rise and Kiwis are paying the price," she said.
"Behind every unemployment statistic is a person who wants to work, a family worried about paying the bills, and a community feeling the impact."
"Young people are being hit hard with too many unable to get the first job they need to start their careers.
“Christopher Luxon can keep telling New Zealanders the economy is turning a corner, but if you’ve lost your job, can't find work, or worried you'll be next, you know that simply isn't true.
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"Māori and Pasifika communities continue to bear the brunt of National's failure, with unemployment remaining significantly higher than the national average at 10.8% and 11.6%.
"National can't claim success when their choices have deliberately made things worse. They cut thousands of public sector jobs, cancelled major infrastructure projects, and scrapped investment that supported business and innovation."
Green Party co-leader Chlöe Swarbrick also reacted to the announcement.
She said: "Christopher Luxon's economic decisions have produced the highest unemployment rate in over a decade. Political tit for tat aside, it's time for the Prime Minister to put his hands back on the wheel of this economy and invest in our country.
"Clearly, cut after cut doesn't grow an economy. It breaks one."
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