New data on the local employment and jobs market has highlighted that there are more people working and more people not wanting to work.
The unemployment rate fell slightly to 5.3 percent in the March 2026 quarter, down from 5.4 percent in December, as people got jobs, others stopped looking, and even more weren’t immediately seeking or available for work.
The labour force participation rate dropped slightly to 70.4 percent of the working age population, even as employment rose 0.2 percent in the quarter (seasonally adjusted), to sit 0.4 percent higher than a year earlier.
Employment growth remained skewed towards part-time roles, with a 0.6 percent lift in part-time roles compared to a 0.1 percent lift in full-time roles.
The underutilisation rate remained flat at 12.9 percent, having been broadly unchanged over the last year. There were more people underemployed and wanting to work more hours, but this increase was offset by lower unemployment and a lower potential labour force.
The number of paid hours (from the QES) and worked hours (from the HLFS) rose, up 0.6 percent and 0.8 percent respectively, over the quarter (seasonally adjusted).
There were an extra 11,000 people in the working age population, with a net 2,000 entering the labour force, and a net 9,000 being counted as not in the labour force. Of the net 2,000 who went into the labour force, there were an extra net 4,000 who were employed, but a net 2,000 fewer unemployed.
The regional differences in unemployment rates continue to be stark. Auckland’s unemployment rate rose to 6.6 percent in the March quarter, the highest since the March 2014 quarter, and Wellington’s unemployment rate rose to 6.3 percent, the highest since September 2015. In contrast, Canterbury recorded a 4.4 percent unemployment rate, and Otago a 3.6 percent unemployment rate.
Labour cost measures were little changed, with the Labour Cost Index for both the private sector and all sectors combined up 2.0 percent pa in the March 2026 quarter, in line with last quarter.
Brad Olsen, Chief Economist at Infometrics, said that the labour market was mixed in the March 2026 quarter, with a further increase in employment, a drop in unemployment, but an overall decline in participation that could continue to slide as the economic effects of the Iran War start to filter through.
“The figures largely predate the Iran War, and there is nothing in our first glance at the figures that suggests any early effects showing through; we’d expect any initial conflict-related effects to show through in the June quarter,” said Olsen.
He added that, although there has been some further job growth, and job ads are higher, the labour market still contains significant slack, and increased uncertainty has meant employers are likely to restrain their hiring intentions in the short term, look at fewer permanent or full-time roles, and have opted for more part-time or casual roles.
Olsen said it was difficult to read too much into these figures, given the various movements within each labour market group.
“Overall, our read is that there has still been some small but sustained jobs growth, but that there’s also a continued trend of a slowly falling participation rate, as jobs are still limited and some of those previously wanting work find it hard to secure a role and stop actively participating.”
The fact that the underutilisation rate has remained broadly unchanged over the last four quarters does indicate that, although things likely aren’t getting worse in the jobs market overall, there hasn’t been a strong improvement trend showing through yet either.
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