New Zealand business confidence jumps in September quarter

Business confidence in New Zealand has rebounded sharply during the September quarter, according to the latest Quarterly Survey of Business Opinion (QSBO) from the New Zealand Institute of Economic Research (NZIER). A net 40% of firms now expect an improved economic outlook, a significant jump from 12% in the June quarter. This surge in optimism comes despite global geopolitical tensions and rising oil prices, although the NZIER cautioned that these uncertainties remain a potential headwind for the economy.

The survey highlighted that demand remains the primary constraint for businesses, with hiring skilled workers also proving difficult. However, there are signs that spare capacity in the market is diminishing, supporting a turnaround in firms’ investment intentions. Retailers and service sector businesses reported weak demand and profitability, but remained optimistic about future economic conditions. The NZIER noted that higher interest rates are likely to restrain household spending in the coming year.

The building sector saw a notable improvement in sentiment, with 46% of firms expecting a better economic outlook. However, the construction pipeline for housing and commercial projects remains flat. Meanwhile, the manufacturing sector reported increased demand but deteriorating profitability due to rising costs. The NZIER suggested that easing cost pressures may reduce broader inflation risks, as fewer firms were able to pass on higher costs through price increases.