According to the New Zealand Institute of Economic Research’s (NZIER) latest Quarterly Survey of Business Opinion, released this week, business confidence increased in the final quarter of last year.
The survey, which the NZIER has run since 1961, is a compilation of responses from about 10,000 firms on whether business conditions will deteriorate, stay the same or improve.
A net 9% of firms expected an improvement in general economic conditions over the coming months on a seasonally adjusted basis — compared with a net 4% of firms in the previous quarter that felt downbeat about the general economic outlook.
But despite the improvement in business confidence, the measure of firms’ own trading activity suggested “a weak demand environment”, the NZIER said.
A net 26% of firms reported a decline in their own business activity in the December quarter.
Meanwhile, a net 17% of firms reduced staff numbers.
Business South chief executive Mike Collins said he had heard a pretty similar sentiment among businesses in the South.
Businesses were wanting to “kick off 2025 with more optimism” and a sense of confidence among them was returning.
He knew of a lot of businesses that were putting an emphasis on “leaning up” as much as possible, focusing on improving productivity, and some that were looking to international markets.
Businesses in Otago and Christchurch tended to be more optimistic about the future than those in Auckland and Wellington — the latter had been hit quite significantly in the public service sector.
“Certainly, I see through the figures and just talking to businesses that we’re probably more optimistic the further south you go.
“That kind of comes back to that No 8-wire philosophy of just getting on and doing things and rolling our sleeves up.”
In a statement, Finance Minister Nicola Willis said the survey showed the highest level of general business confidence since 2021 — a sign the economy was “moving in the right direction”.
But Mr Collins said time would still tell.
Businesses still wanted to see more action from the government around implementing its intended policy changes to create an environment conducive to business.
“I think the sentiment’s there, but now it’s about execution.”
The NZIER also said the retail sector remained upbeat about the general economic outlook.
While demand was still weak in the December quarter, a notable proportion of retailers expected a recovery in the next.
Some retailers had been able to raise prices, but profitability in the sector remained weak as cost pressures intensified.
Meanwhile, a net 29% of building sector firms surveyed said they felt positive about the general economic outlook in the coming months.
This was a “sharp turnaround” from the 9% of building sector firms that felt pessimistic in the previous quarter, and more than half that did during the first half of last year.
