The unemployment rate may have cracked the 6 percent mark, but it is set to rise even further as the economy loses steam, resulting in fewer jobs.
Official figures show the unemployment rate increased to 6 percent in the September 2015 quarter, from 5.9 percent three months earlier.
Statistics New Zealand said the number of people unemployed was the highest in two years, and more significantly the economy lost 11,000 jobs for the first time in three years, with the annual job growth rate halving to 1.5 percent.
Westpac senior economist Satish Ranchhod said the unemployment rate would have been higher but for the fact that people appeared to have stopped looking for work, resulting in a fall in the participation rate.
"The softening in economic activity has passed through to softer confidence for households and businesses and it does seem to have passed through the number looking for work, particularly older workers."
The construction and retail sectors remained strong job creators, but there were losses in the financial, transport and business services sectors.
"Over the coming year, the economy is going to face some pretty significant headwinds and it's likely we'll see the unemployment push up," Mr Ranchhod said.
Forecasts for unemployment range as high as 6.5 percent over the coming year, especially if immigration holds around record levels seen over the past year.
Labour cost data released at the same time showed wages growth below expectations at 0.4 percent for the quarter with the annual rate steady at 1.6 percent .
The labour market data can be volatile and prone to some wild swings and ANZ Bank senior economist Philip Borkin said the weakness should not be over exaggerated.
"Nevertheless, today's data will accentuate the bias towards the RBNZ (Reserve Bank of New Zealand) cutting (interest rates) again, and sooner - that is December - as opposed to later."
The latest Reuters poll has 13 of 14 respondents picking a quarter percentage point cut to the official cash rate to 2.5 percent in December.