New Zealand's unemployment rate rose to 5.6 percent in the three months ended June 2026, Stats NZ reported on 4 August. That is up from 5.4 percent in the previous quarter and is the highest rate in nearly 11 years (RNZ).

The result was worse than most forecasters expected, including the Reserve Bank's own estimates. Economists had warned it was coming: interest.co.nz reported on 1 August that they expected the data to paint a "soft picture" of the economy, and that a rate of 5.5 percent or higher would mark an 11-year high (interest.co.nz).

Stats NZ reported 171,000 people were unemployed in the June quarter, up 7,000 on the March quarter and 13,000 more than a year ago. The rate has been climbing steadily: 5.2 percent in June 2025, 5.3 percent in December 2025, 5.3 percent again in March 2026, and now 5.6 percent (interest.co.nz).

Part of the reason the rate went up is that the workforce grew faster than the number of jobs. The workforce grew by 21,000 in the quarter, but the number of people employed rose by only about 5,000. Employment was still 33,000 higher than a year earlier.

A broader measure called underutilisation also rose, to 13.8 percent — a 12-year high. This measure counts not just people looking for work, but also those who have jobs but want more hours. The NEET rate, which tracks 15–24-year-olds not in education, employment or training, went up to 13.8 percent from 12.9 percent.

Long-term unemployment is also climbing. About 19 percent of unemployed people in the June quarter had been out of work for a year or more. Stats NZ labour statistics spokesperson Abby Johnston said roughly 8,000 more people were in long-term unemployment than in the same quarter a year earlier.

The regional split is sharp. North Island unemployment sat at 6 percent, while the South Island was at 3.7 percent. Northland and Auckland had the highest rates, both above 6 percent. Every South Island region was below 5 percent.

Wages are not keeping up with prices. The broad wage measure showed pay growth at a five-year low of 2 percent, while consumer prices rose 4.1 percent. Another measure showed the average hourly rate up just 1.1 percent, with hours worked falling.

The December 2025 quarter, reported in February, put male unemployment at 5.3 percent and female unemployment at 5.6 percent (Stats NZ). FRED data from the Federal Reserve Bank of St. Louis recorded a rate of 5.7 percent for Q1 2026 (FRED).

Economists and financial markets expected the Reserve Bank to raise the official cash rate to 2.75 percent early in September, in response to inflation driven by a global fuel surge. The jobs data adds pressure on that decision. The Bank is caught in a difficult spot: unemployment is rising at the same time as prices are going up. That combination is sometimes called stagflation, and the June numbers do not make the Bank's job any easier.

The underutilisation rate reaching a 12-year high is worth particular attention. The headline unemployment number only counts people actively looking for and available to work. Underutilisation is wider, including people who have jobs but want more hours and people who would like to work but are not actively searching. At 13.8 percent, it tells us there is more spare capacity in the labour market than the 5.6 percent headline figure alone suggests.

The North-South divide matters politically too. Northland and Auckland sitting above 6 percent, while the South Island stays below 5 percent, means the economic squeeze is not being felt evenly. For a government watching its polling in the upper North Island, that is a different situation from a slowdown spread evenly across the country.

The long-term unemployment figures are also a concern. An 8,000 increase in people out of work for a year or more suggests some of those who lost jobs are not finding new ones quickly. If that pattern continues, it can become a longer-term problem where people stay detached from the workforce even after the economy picks up.