A Decade High: New Zealand Unemployment Hits 5.4% Amid a Shifting Job Market
By Lions Roar Aotearoa (Diyatha News New Zealand) Economic Desk Source Credit: Based on reporting by Stats NZ and analysis from Brad Olsen at Infometrics.
WELLINGTON, NEW ZEALAND — Thursday, February 5, 2026 — New Zealand’s labor market is showing signs of significant strain as the national unemployment rate climbed to 5.4 percent in the final quarter of 2025. According to data released by Stats NZ this week, this represents the highest unemployment level the country has faced since March 2015.
While the headline figure of 165,000 unemployed persons suggests a cooling economy, a deeper dive into sector-specific data reveals a “tentative” job market where part-time work is replacing full-time roles in several key industries.
1. The Surge in Part-Time Employment
Brad Olsen, chief executive at Infometrics, notes that while full-time positions have dipped by 0.9% year-on-year, the number of part-time roles has surged by 2.1% (an increase of 11,400 jobs).
“The increase in part-time work suggests businesses need capacity but aren’t yet willing to commit to full-time hires,” Olsen explained. This trend is being viewed as a sign of economic “shyness” as businesses wait for more consistent sales before making permanent commitments.
2. Industry Winners: Tourism & Hospitality
The standout performer in the current climate is the Accommodation and Food Services sector. Driven by a robust recovery in tourism—now at 90% of pre-pandemic levels—this sector added over 25,000 jobs in the last year.
- Full-time growth: +17,000 roles
- Part-time growth: +8,000 roles
Olsen suggests that New Zealanders are shifting their spending habits, choosing to spend more on “going out to eat” and groceries rather than traditional retail items.
3. Industry Losers: Construction & Manufacturing
On the flip side, the Construction and Manufacturing sectors are undergoing a painful “right-sizing” period.
- Construction: Witnessed a massive 8.4% overall decline in employment. Olsen believes the industry may not return to its 2022-23 peak levels anytime soon as activity remains below previous highs.
- Manufacturing: Lost 7,000 roles over the last year, largely driven by a sharp drop in full-time positions.
4. Sector Snapshot: Part-Time vs. Full-Time
| Industry | Total Job Trend | Part-Time Trend | Full-Time Trend |
| Accommodation | Up 25,000 | Growing | Growing |
| Health | Up 7,000 | Up 10,000 | Down 3,000 |
| Retail | Down 400 | Up 3,700 | Down 4,100 |
| Manufacturing | Down 7,000 | Slight Up | Down 7,300 |
5. Market Outlook
Despite the high unemployment rate, business surveys suggest a growing sense of optimism for the remainder of 2026. Experts anticipate a gradual transition back from part-time to full-time hiring as the year progresses, provided that sales and general economic activity strengthen.
