New Zealand Q3 business confidence 18% vs 22% previous quarter
New Zealand business sentiment weakened in the September quarter, with the NZIER Quarterly Survey of Business Opinion (QSBO) showing a net 15% of firms expecting better economic conditions ahead, down from 26% in June. Actual business activity fell further, with 14% of firms reporting weaker trading, though 9% expect demand to improve next quarter — continuing a year-long pattern where optimism has outpaced reality.
Hiring and investment plans were cut back sharply: a net 23% of firms reduced staff, while 13% expect to trim spending on plant and machinery and 20% on buildings. Weak demand remains the dominant concern, cited by 63% of firms, while labour shortages have eased, indicating excess capacity in the job market.
Among sectors, manufacturing was the least optimistic, hurt by soft export demand and declining profitability, while construction remained cautious amid weak new orders and a flat pipeline for housing and commercial projects. Retailers, despite weak sales and heavy cost pressures, were the most optimistic, and services firms remained hopeful that falling interest rates will lift demand over the coming year.
Inflation pressures ticked higher, with a net 11% of firms raising prices — a reversal from price cuts last quarter. NZIER expects headline CPI to edge just above 3% in coming quarters before easing back toward 2% as slack in the economy builds. It forecasts two further 25-basis-point rate cuts by the Reserve Bank of New Zealand at its October and November meetings.
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The softer QSBO underscores New Zealand’s uneven recovery and reinforces expectations for further RBNZ easing. Persistent weak demand and easing labour conditions point to disinflation later in 2025, though near-term inflation risks linger as cost pressures return.
The Bank meet Wednesday, October 8, 2025, New Zealand time.
Statement due at 2pm New Zealand time:
- 0100 GMT
- 2100 US Eastern time (on Tuesday, October 7, 2025)