National unemployment rate in New Zealand - Data and Analysis (1987-2034)

IBISWorld forecasts the national unemployment rate to climb by 0.13 percentage points in 2026-27, to 5.43%. This hike is closely tied to a combination of underlying factors. Though RBNZ (Te Putea Matua) has been easing interest rates since mid-2024, the recent conflict in the Middle East, beginning in March 2026, has added significant economic volatility, with an expected surge in inflation. Additionally, negative consumer sentiment is expected to weigh on consumer spending, placing upwards pressure on the unemployment rate. The RBNZ (Te Putea Matua) is expected to keep the OCR elevated, despite previously moderating interest rates easing in 2025-26. Tight monetary policy is set to restrain economic momentum and businesses' hiring decisions. Combined with high net migration and a growing labour force participation rate, these factors have all contributed to the uptick in unemployment over the past year.After the pandemic-driven surge in unemployment through 2020-21, strengthening economic conditions over the two years through 2022-23 improved the job market, with unemployment rates falling. Recovering business conditions supported increased labour demand, and the economy gradually reopened. Over the two years through 2024-25, the unemployment rate trended upwards as high inflation limited growth in real household incomes and slowed job creation by private sector businesses. This trend was compounded by the Reserve Bank of New Zealand holding interest rates high, reaching 5.5% in May 2023 and remaining elevated till a gradual easing in August 2024, to combat inflation, which dampened private-sector expansion amid higher borrowing costs. Towards the end of 2025-26, the US-Israel-Iran conflict has added to inflationary pressures by raising energy prices. As the RBNZ attempts to bring inflation back to target, interest rates are expected to remain steady and relatively higher, dampening private-sector expansion. As a result, IBISWorld forecasts the national unemployment rate to rise at an average annual rate of 0.40 percentage points over the five years through 2026-27.