The Opposition says the jump in the unemployment rate shows the economic momentum the Government inherited has ended.
But Employment Minister Willie Jackson said the numbers were not unexpected and stressed the data showed wages were still rising.
Data from Statistics New Zealand this morning revealed the jobless number increased from 4 per cent, to 4.3 per cent in the final quarter of last year.
This was the first time the unemployment rate had increased since the end of 2016.
But, at the same time, Māori unemployment has continued to fall and dropped to the lowest level in more than a decade.
The 0.3 per cent jump in the overall unemployment number was ahead of market expectations and the Kiwi dollar dropped more than half a cent against the US dollar after the numbers were released.
National's finance spokeswoman Amy Adams said the numbers show the Government "needs to take a reality check".
Although the jobless number remains relatively low compared to other similar countries, today's data means New Zealand slipped from having the ninth lowest unemployment rate in the OECD, to the 14th.
The number of people not in education, employment or training (NEETS) rose by 26,000 people and is now at the highest rate since March 2011.
"If this trend continues, it is a bad look for a Government that claims to be doing more to 'get the nephs off the couch' and suggests it is failing to deliver on key promises," Adams said.
Although the overall unemployment number was up slightly, Māori unemployment fell from 8.5 per cent to 8.2.
Māori unemployment has been tracking down for years and has fallen from just under 14.6 per cent in 2012.
Jackson said since the Government took over, there had been a steady rise in employment.
He said the data showed wages were up by 3.1 per cent over the past year.
But he said he was concerned by the underutilisation rate – the total number of people who are willing and able to work more hours – which was up to 12.1 per cent last quarter.
"I have asked my officials to investigate this underutilisation issue, as I believe there may be an opportunity to address many of the workforce issues employers are currently facing by tapping into this unused resource."