Business confidence drops

Business confidence dropped in the September quarter, with the 15 per cent of firms expecting an improvement in general economic conditions over the coming months down from 26 per cent in the June quarter.
The findings in the latest NZ Institute of Economic Research (NZIER) Quarterly Survey of Business Opinion also show a net 14 per cent of companies reported a decline in activity in their own business between July and September.
However, a net nine per cent expect improved demand in the final quarter of 2025.
Christina Leung, NZIER deputy chief executive, says: “A significant gap remains between firms’ experienced demand, which is still weak, and their expectations of improved demand ahead.
“For the past year, actual activity has fallen short of earlier expectations of a recovery.”
The survey reveals the hiring and investment intentions of firms have reduced and a net 23 per cent cut staff numbers in the September quarter.
A net 20 per cent also intend to reduce investment in buildings over the coming year. Leung, pictured, notes the continued disappointing nature of the recovery in demand, combined with the volatile global backdrop, is driving heightened caution among firms.
“Weak demand continues to be the key concern for firms, with a net 63 per cent of firms reporting a lack of sales as the primary constraint on their business.
“In contrast, a net three per cent reported finding labour as the primary constraint.”
Manufacturing emerged as the least optimistic across the sectors surveyed and the building sector remains “cautiously optimistic”.
“While there was a drop in confidence, retailers remained the most optimistic sector surveyed in the September quarter, despite continued weakness in new orders and sales,” adds Leung.
“Cost pressures in the retail sector remain intense, but the proportion of retailers able to raise prices eased.
“In responding to the intense cost pressures and weak demand, a substantial proportion of retailers also reduced staff numbers in the September quarter.”