Northland’s annual average unemployment rate stood at 8.1% in the year to June 2026, the highest regional reading in Stats NZ labour market data. Gisborne/Hawke’s Bay followed at 7.0%. South Island groupings clustered between 3.8% and 4.2%.
Kiwibank’s latest Regional Score, reported on 3 September 2026, placed Otago and Canterbury at the top of its rankings and Wellington and Gisborne at the bottom. Chief economist Jarrod Kerr tied the split to tourism and agriculture in the south versus weak demand and higher costs in much of the north.
Nationally, the seasonally adjusted unemployment rate was 5.2% in the June 2026 quarter, up 0.1 percentage point from 5.1% in March. Stats NZ counted 160,000 unemployed people on a seasonally adjusted basis. The underutilisation rate rose 0.2 percentage points to 12.3%.
Filled jobs fell 0.6% quarter-on-quarter to 2.35 million. The employment rate was 66.3%. Average ordinary-time hourly earnings rose 4.7% year-on-year to $43.98. Average weekly earnings, including overtime, rose 5.3% to $1,668.
Regional annual averages for the year to June 2026 line up with the bank scoreboard. Wellington’s 5.9% sat above the national seasonally adjusted rate and above every South Island grouping. Canterbury printed 4.2%, Otago 4.1%, Southland 3.9%, and Tasman/Nelson/Marlborough/West Coast 3.8%.
Kerr characterised the national downturn as long. He dated its start to 2023, cited recessions in 2024 and 2025, and said 2026 would show at least one quarter of contracting activity.
This is a really long downturn. This started in 2023. We had a recession in 2024, we recorded another recession in 2025 and we would have recorded a contraction in activity at least one quarter this year, so that is a very long time.
He said a recovery signal in the second half of 2025 was postponed into 2026 by offshore and domestic shocks.
We saw very strong evidence of a recovery over the second half of 2025, and we came into 2026 quite optimistic... and we've been sideswiped. I think that recovery's still there, it's just been postponed.
Kerr attributed stronger South Island conditions to tourism-heavy and agricultural regions. Many North Island households and firms still faced weak demand, higher costs and uncertainty, he said.
The economy is improving, but it's doing so at different speeds across the country. Tourism-heavy and agricultural regions in the South Island are leading the way, while many households and businesses in the North are still feeling the pressure of weak demand, higher costs and economic uncertainty.
Kerr’s bank commentary put North Island unemployment near 6% and South Island near 3.7%. Official Stats NZ regional annual averages support the north–south pattern but should be used for ranked comparisons. National underutilisation in the June quarter was 12.3% seasonally adjusted, lower than the roughly 13.8% figure attributed to Kerr in bank commentary. Readers should treat the 13.8% line as Kiwibank commentary, not the official quarterly print.
On hours and income, Kerr said the labour market tells a clear story for northern households.
The labour market tells the story clearly. Many households are finding it difficult not just to secure work, but to secure enough hours and income. That's especially true in parts of the North Island.
Housing collateral and SME credit
Housing is the second channel Kerr stressed. After the post-Covid boom, prices corrected then went sideways, especially in Auckland and Wellington. Otago and Southland showed the strongest house-price performance in the bank’s score.
About half of small businesses have lending secured against the owner’s home, Kerr said. Flat collateral raises the effective cost of capital and weighs on confidence even after the Official Cash Rate fell to 3.4%. RBNZ-linked commentary attached to the June labour release said the OCR was expected to remain at 3.4% for some time while the labour market stayed soft and wage growth slowed.
Treasury’s Fortnightly Economic Update on 11 June 2026 expected manufacturing, retail and wholesale to lead March-quarter GDP growth. Construction remained a drag despite some improvement in consents. The same update flagged higher oil prices as lifting global inflation and interest rates. The 7 May update noted labour-market momentum but weaker household and business confidence as risks.
