All 16 regions expand as recovery proves more resilient than feared
New Zealand's economic recovery advanced further in the June 2026 quarter, holding up better than expected despite disruption from conflict in the Middle East, according to Infometrics' latest Quarterly Economic Monitor. Provisional estimates show economic activity rose 2.6% year-on-year in the quarter, with growth broadening across all 16 regional economies.
South leads, but growth spreads north
Infometrics principal economist Nick Brunsdon (pictured) said the strongest gains remained concentrated in the South Island. "Growth continues to be led from the south, with Southland, Otago, Canterbury and Nelson-Tasman all growing at over 2%pa in the year to June 2026. Parts of the North Island are joining in too, with strong growth seen in both Waikato and the Bay of Plenty."
Brunsdon said the resilience of the result partly reflected a soft comparison base and a milder-than-feared economic hit so far. "Despite the clear economic headwinds from conflict in the Middle East, economic activity might not have been as badly hit as first feared. The more upbeat result is due to a combination of the weaker economy last year, and less of an intense hit to the economy – so far – from the Iran War." He added that primary sector strength remains a key driver, though growth is now showing up across most industries, while cautioning that the pace of recovery through the rest of 2026 remains uncertain given ongoing global instability.
That caution lines up with the monetary policy backdrop: the RBNZ delivered its first OCR hike in three years on 8 July, lifting the cash rate to 2.5%. Inflation has since climbed to a two-year high, prompting banks to pencil in further increases.
Jobs market and spending lag the recovery
Employment growth is yet to catch up with the broader recovery. National job numbers rose 0.4% year-on-year in the June quarter, including a 0.3% lift in Auckland, ending a two-year run of declines, though six regions still recorded job losses. Even so, the unemployment rate has continued to climb, as a growing labour force — more people working or actively looking for work — has outpaced the pace of hiring.
Household spending remains similarly constrained. Marketview card spending data showed a 0.6% annual increase in nominal terms, but Brunsdon noted spending volumes actually fell 1.5% once retail inflation, including higher fuel prices, is factored in. Tourism offered a brighter spot, with commercial guest nights up 3.6% for the year, driven by a 9.1% surge in international visitors, while domestic guest nights rose just 0.6% as higher fuel costs kept a lid on local travel.
Construction pipeline builds momentum
Residential construction intentions strengthened further, with consents up 19% to over 40,000 in the 12 months to June 2026. Provincial areas led the increase at 22%, followed by metro areas at 20%, while rural consents fell 5.3% as population trends shift.
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