New Zealand’s business confidence dropped to its lowest level since mid-2024 in the first quarter of 2026, with a net 4% of firms expecting the economy to deteriorate over the next six months, according to the New Zealand Institute of Economic Research (NZIER) Quarterly Survey of Business Opinion released on Tuesday. This represents a sharp reversal from the fourth quarter of 2025, when a net 48% of firms anticipated an improvement, as the conflict in the Middle East pushes up costs and squeezes profitability.
Forward-looking indicators also weakened, with firms scaling back both hiring and investment plans. A net 9% reduced staff over the quarter, while investment intentions for both buildings and machinery turned negative.
By sector, construction was the weakest, as demand softened and profitability worsened amid rising costs and reduced pricing power. In contrast, the manufacturing sector remained comparatively upbeat, supported by robust export demand.