Coasties may find cause for optimism as the latest NZIER Quarterly Survey of Business Opinion (QSBO) reports the highest level of business confidence since 2021.

This marks a notable turnaround following years of challenges from inflation and rising interest rates.

The survey reveals that a net 9 percent of firms expect an improvement in general economic conditions over the coming months, compared to a net 4 percent who were pessimistic in the previous quarter.

Finance Minister Nicola Willis noted that this positive shift reflects growing confidence in the Government’s economic plan.

"When businesses have the confidence to invest and grow, it means more jobs and higher incomes for Kiwis," Willis said.

She added, "Business confidence turning positive for the first time since 2021 is a sign that we’re heading in the right direction, with policies focused on easing inflation and fostering growth."

Finance Minister Nicola Willis.

However, the survey also indicates that many businesses remain cautious.

While general sentiment has improved, a net 26 percent of firms reported a decline in their own trading activity during the December quarter.

Hiring and investment levels also remain subdued, with a net 17 percent of businesses reducing staff numbers.

Firms are expected to hold off on major investments until they see more consistent signs of demand recovery.

Building Sector Drives Optimism

Among the surveyed sectors, the building industry showed the strongest optimism, with a net 29 percent of firms expressing positive expectations for the coming months.

This reflects a sharp turnaround from earlier in 2024 when the majority were pessimistic.

Despite this, many in the sector reported continued declines in new orders and output, though expectations of a recovery are bolstered by projected construction pipelines for the next 12 to 24 months.

The retail and services sectors also expressed confidence about future conditions.

While current demand remains soft, lower mortgage rates expected over the coming year could boost household spending.

In contrast, manufacturers reported a more cautious outlook, citing higher costs and reduced profitability despite increased export demand supported by a weaker New Zealand dollar.

Easing Inflation Pressures

Encouragingly, the survey highlighted easing inflation pressures, with fewer firms reporting rising costs or raising prices.

A decline in capacity constraints, driven by weak demand, appears to be the primary factor behind this trend.

While businesses across sectors anticipate recovery, their caution underscores the delicate balance between optimism and tangible economic growth.

As locals keep an eye on economic developments, the survey’s findings suggest a cautiously improving outlook for the Hibiscus Coast and beyond.

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