NZIER Survey Highlights Mixed Business Sentiment
New Zealand businesses hold hopeful optimism yet are aware of the harsh realities, as per recent confidence reports.
The latest NZIER Quarterly Survey of Business Opinion (QSBO) showed firms remained optimistic about an improvement in the general economic outlook. NZIER said this upbeat mood remains in stark contrast to the continued weak demand as reported by firms.
“Business confidence has rebounded significantly since this time last year, but the early optimism late last year hasn’t continued its upward trajectory into 2025, with consumer confidence and demand being slower to rebound than anticipated and continued geopolitical instability taking its toll,” says Business Canterbury Chief Executive Leeann Watson.
“However, while our businesses aren’t getting more confident each quarter, it’s still generally positive out there.
“When we look at the key indicators, 59% of businesses are expecting to hire staff within the next 12 months and similarly, those expecting to invest in property, plant and equipment sits at 60%, compared to 57% last quarter.
“So, while the current environment could be described as stationary, it is by no means gloomy.”
According to the latest QSBO from the New Zealand Institute of Economic Research (NZIER), a growing number of businesses expect economic conditions to improve in the months ahead.
Still, a similar share of respondents reported a recent decline in their own trading activity, and a significant portion continues to cite a lack of sales as their biggest barrier to growth.
Firms Focus on Resilience Over Expansion
Business leaders continue to stress the importance of adaptability and resilience in a market where the outlook is cautiously optimistic but uneven. As firms navigate an unpredictable mix of improving
macroeconomic indicators and persistent on-the-ground challenges, many are focusing on consolidation over expansion, prioritising core services and strengthening internal operations.
There’s also a notable shift in how businesses are planning for the rest of 2025. Rather than banking on a swift rebound, many are treating the current plateau as the “new normal” — adjusting forecasts, slowing down hiring, and holding back on large capital expenditure until more consistent growth signals emerge.
Canterbury Economy Shows Regional Strength
Leeann Watson identified different levels of market recovery across different sectors, with businesses falling into three distinct categories: those making significant headway in growth, those in recovery mode but not yet ready to expand, and a sizeable group still struggling with challenging decisions about their future.
“The big challenges haven’t shifted much, we’re still hearing concerns around consumer confidence and demand, productivity and growth, inflation and interest rates, cashflow, and compliance costs.
“These remain front of mind for many of our members and the wider business community, and despite drops in the OCR, we are yet to see the full impact of these, with many still on fixed rates locked in over the last two years, which is also impacting sticky consumer confidence and demand.
“Canterbury is positioned well to grow quickly when the market turns. Canterbury is the place to be, and people want to be part of our growth story. Since 2018, over 40,000 people have moved to Canterbury from other parts of New Zealand.”
“Our regional economy is also highly diversified, 5th compared to Auckland at 11th and Wellington at 14th – contributing to business resilience here, with 82% reporting confidence in their ability to manage disruption.”
Sector Snapshots Reveal Uneven Recovery
Supply chain conditions have broadly improved, with fewer firms reporting delays or input shortages. However, global shipping costs and fuel prices remain volatile, particularly in light of ongoing geopolitical tensions and instability in key trade regions. This uncertainty continues to weigh on exporters, who are also grappling with softer offshore demand and a strong New Zealand dollar in recent months.
In the retail sector, anecdotal evidence suggests uneven foot traffic and sporadic sales performance, particularly outside of peak trading periods. Hospitality and tourism operators in key centres have reported a modest pickup in domestic travel and events-related activity but say international visitor numbers have not fully rebounded to pre-COVID levels, and the spend per visitor remains lower than desired.
Construction firms, meanwhile, are cautiously optimistic. Easing material costs and improved labour availability have enhanced workflow predictability, but developers remain cautious about market demand, particularly in the residential sector. High interest rates and stretched household budgets continue to suppress buyer activity, with many projects either scaled back or delayed.
Small businesses and sole traders remain particularly vulnerable to these risks. For these operators, even minor fluctuations in customer behaviour or compliance obligations can have outsized impacts. Several industry bodies have renewed calls for targeted support, simplified regulatory requirements,
and access to affordable credit to help smaller firms survive what many describe as a “slow and uncertain climb” back to pre-2022 levels of activity.
Outlook for 2025: Steady, But Slow
Looking ahead, most business groups are in agreement: while the worst may be over, the recovery will be gradual, uneven, and contingent on both international stability and domestic policy agility. Businesses are ready to move — but the green light hasn’t quite arrived.
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