New Zealand unemployment hits 11-year high at 5.7% as employment weakens

New Zealand’s unemployment rate climbed to an 11-year high of 5.7% in the September 2026 quarter, with employment declining slightly as businesses remained cautious about hiring. 

The figures reported continued pressure on the country’s labour market ahead of the November 7 general election.

According to Statistics New Zealand (Stats NZ), around 174,000 people were unemployed during the quarter, up from 5.5% in the previous three months. Employment fell 0.1% quarter on quarter, missing economists’ expectations of a 0.4% increase.

Key labour market highlights:

• Unemployment: The rate rose to 5.7%, its highest level since 2015, with 174,000 people out of work.

• Employment: The number of employed people stood at 2.89 million, while the employment rate remained at 66.4%.

• Participation: The labour force participation rate slipped to 70.4%, below market expectations of 70.7%.

• Underutilisation: The rate remained at 13.8%, representing 438,000 people facing some form of underutilisation.

• Hiring intentions: Five per cent of firms reported reducing staff numbers during the September quarter, although a sizeable proportion expect to increase headcount in the next quarter.

Employers continued to exercise caution over recruitment during the September quarter, despite an improvement in business confidence.

Research by the New Zealand Institute of Economic Research (NZIER) found that businesses faced greater difficulty hiring skilled workers, while only a small proportion found it easier to recruit unskilled workers.

“Although demand remains soft overall, these developments point to signs that spare capacity in the New Zealand economy is dissipating,” the NZIER report said.

The broader measure of labour market pressure also remained elevated. Underutilisation includes unemployed people, those available to work but not actively seeking employment, and people working fewer hours than they would like.

While the overall number of employed people changed little, the composition of employment showed signs of shifting towards less permanent and shorter-hours arrangements.

“Casual and fixed-term roles increased over the year, while there was a shift towards part-time employment over the quarter,” said Abby Johnston, Stats NZ labour market spokesperson.

The number of casual employees rose by 19,100, or 19.5%, to 116,900 over the year. Fixed-term employees increased by 8,100, or 18.9%, to 50,900.

“Over the quarter, there was an increase in the proportion of people working part-time, which contributed to a decrease in both usual and actual hours worked,” Johnston added.

The latest figures come as employment and the cost of living remain key concerns for voters ahead of New Zealand’s November 7 election. 

The rise in unemployment adds to the challenges facing Prime Minister Christopher Luxon’s government, as it seeks to demonstrate progress on economic growth and household cost pressures.