NZ economy grows again — but households and jobs lag behind

New Zealand's economy grew 2.6 percent in the June 2026 quarter, with all 16 regions expanding, according to provisional figures from Infometrics' Quarterly Economic Monitor. Over the full year to June 2026, activity was up 1.7 percent.

The result follows a sustained downturn. Infometrics principal economist Nick Brunsdon said Southland, Otago, Canterbury and Nelson-Tasman all grew above 2 percent over the year, with Waikato and the Bay of Plenty also recording strong growth. A robust primary sector (farming, forestry, fishing and mining) and increased activity across most industries drove the quarterly result.

Infometrics said the brighter figures partly reflect what economists call base effects — the economy was unusually weak in the same period a year earlier, making the current quarter's growth look stronger by comparison. The figures also reflect a less severe economic hit from the Iran War than initially feared.

Jobs market is mixed

The labour market tells a more complicated story. Job numbers rose 0.4 percent in the June quarter, including a 0.3 percent lift in Auckland, following two years of decline. But six regions saw job numbers fall. The unemployment rate rose as more people looked for work than there were job advertisements to fill them.

Household spending remains delicate. Marketview data showed card spending rose just 0.6 percent in the year to June 2026. Once retail inflation (the rising cost of goods and services) is stripped out, Infometrics estimates the actual volume of goods people bought fell 1.5 percent over the same period.

Residential construction, by contrast, showed clear recovery. Building consents — the formal approvals needed before construction begins — lifted 19 percent to more than 40,000 over the 12 months to June. Provincial consents were up 22 percent and metro consents up 20 percent, while rural consents fell 5.3 percent.

Tourism and global outlook

Tourism was a bright spot. Commercial guest nights rose 3.6 percent over the June 2026 year, driven by a 9.1 percent lift in international guest nights. Domestic guest nights rose just 0.6 percent.

The global backdrop is less encouraging. The World Bank's June 2026 Global Economic Prospects forecast global growth slowing to 2.5 percent in 2026, down from 2.9 percent in 2025, and downgraded forecasts for two-thirds of the economies it covers. The IMF revised its 2026 global growth forecast down by 0.2 percentage point relative to its January 2026 Update, leaving the 2027 forecast unchanged. Focus Economics' consensus forecast expects Iran's economy to contract 1.0 percent in 2026. Allianz Research's 2026–27 outlook, titled "The Fog of War," anticipated the Middle East conflict would deliver lower growth, higher inflation, stronger fiscal pressure and higher deficits for the US and Europe.

Forecasters have revised their outlook for New Zealand several times. Infometrics' January 2026 outlook pegged GDP growth at 2.5 percent for the year, rising to 2.9 percent in early 2027. An April 2026 revision cut that to 1.3 percent per annum, reflecting weaker conditions. By July 2026, Infometrics revised again, expecting growth to reach 2.7 percent per annum by mid-2027 and averaging 2.3 percent over the following four years. The July forecasts noted that businesses were investing more despite ongoing challenges, with business confidence having lifted and the March 2026 quarter providing a stronger starting point.

What it means for the election

The broader context here is political. The Infometrics monitor provides the last comprehensive economic snapshot before the 2026 election campaign. The government can point to growth across all regions and a construction sector turning the corner. The opposition has the counter: spending volumes are down, unemployment is rising, and the global environment is deteriorating.

What the July forecasts suggest is that Infometrics sees the economy finding a firmer footing, even if the pace of recovery is uneven and conditions abroad remain hostile. The trajectory has shifted three times in seven months, which itself signals how much uncertainty forecasters are working through.