Regional jobless gap: Northland 8.1%, South Island under 4.3%

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.

Brent crude last-day financial futures recently traded near US$95.54. The 52-week range ran from about US$58.72 to US$126.10, well above Kerr’s preferred sub-US$70 level. NZD/USD printed near 0.585, inside a one-year band of roughly 0.558 to 0.609.

Kerr’s preferred near-term fixes included less offshore uncertainty, the Strait of Hormuz open, oil back under US$70, and clearer investor-tax settings after the election. His forward view rests on lower borrowing costs, supportive agricultural incomes and another strong tourism season, with effects first in regional New Zealand and broadening through 2027.

The good news is that the foundations for stronger growth are in place and the direction of travel is positive. Tourism is rebounding, commodity prices remain supportive and lower borrowing costs should help lift activity over the coming year. While the recovery remains uneven, we expect economic momentum to strengthen and become more widely felt across New Zealand through 2027.

He contrasted Christchurch and southern confidence with the north, arguing infrastructure and relatively affordable housing help a city flourish, while a downbeat North Island narrative will need a stretch of solid growth to shift.

What it means for households and firms

For households, the practical gap is jobs and hours. Northland, Gisborne/Hawke’s Bay and Wellington face tighter conditions than Otago, Canterbury or Southland. The June-quarter drop in filled jobs and elevated underutilisation mean the squeeze is not only headline joblessness but insufficient hours and income.

For firms, stagnant Auckland and Wellington house prices continue to constrain SME collateral. That channel slows investment and hiring in domestic-facing businesses even with the OCR already at 3.4%. Export, processing and tourism operators in leading southern regions sit closer to the first lift from lower rates and commodity incomes.

Oil, geopolitics and election-year tax settings remain live risks on Kerr’s list. Clarity on investor taxation and a fall in energy prices would, on his account, help unlock the postponed late-2025 recovery. Until northern labour markets and housing equity participate more fully, national GDP and confidence will still reflect a long, uneven downturn, with 2027 the horizon Kiwibank puts on a more nationwide lift.