Ministry of Education deputy secretary Ellen MacGregor-Reid said declining Level 1 achievement rates in Year 11 reflected a growing number of schools putting less emphasis on Level 1 and encouraging students to take two years to achieve Level 2.
At least two schools have abandoned Level 1 completely.
"Retention is stable, so the same percentage of young people are still engaged in school from Year 11 to Year 12 as in previous years," she said.
"So that does back up what we think is going on - that students are building up to achievement at Level 2.
"As this year unfolds, it will be important that we get a clearer picture of to make sure young people who haven't achieved Level 1 in Year 11 work effectively to get a good NCEA qualification before they leave."
The new data, released today by the NZ Qualifications Authority, are based on a new methodology that counts all domestic students enrolled during each year, rather than just those enrolled on July 1 as reported in previous years.
"There are around 10,500 students, usually for the early part of the year, who were not counted [by the July roll figures]," the authority said.
"This is particularly pronounced for Māori students. In 2017, some 4000 Māori students were not part of the July roll return figures."
The new methodology has widened the ethnic and decile gaps.
In Year 12, only 68.1 per cent of Māori students (down 2.1 points) and 71.8 per cent of Pasifika students (down 1.5 points) achieved NCEA Level 2 in 2018, compared with 81.2 per cent of Europeans (down 0.7 per cent) and 76.8 per cent of Asians (down 0.8 per cent).
The gap is most stark for University Entrance (UE). Only 29.4 per cent of Māori (up 0.1) and 28.8 per cent of Pasifika (down 0.3) students achieved UE, compared with 55 per cent of Europeans (up 0.7) and 60.8 per cent of Asians (up 1.6).
Even allowing for the declining numbers attempting NCEA at the lower levels, the achievement or "pass" rates as a proportion of those attempting the exams fell across all deciles and ethnic groups for NCEA 1 and 2 and for most groups for NCEA 3 and UE.
However NZQA deputy chief executive Kristine Kilkelly said there was no sign that exams were harder or that a shift to online exams had any impact.