October 05, 2021

New Zealand Institute of Economic Research (Inc)
Media release, 5 October 2021

NZIER Quarterly Survey of Business Opinion
Embargoed until 10 am 5 October 2021

The latest NZIER Quarterly Survey of Business Opinion (QSBO) shows a weakening in business confidence in the September quarter, despite demand in firms’ own business holding up.

A net 8 percent of businesses expect a deterioration in general economic conditions over the coming months – a turnaround from the net 9 percent expecting an improvement in the previous quarter. This weakening in sentiment was despite demand remaining solid, with a net 29 percent of businesses reporting an increase in their own trading activity in the September quarter.

This QSBO survey was taken over the period 2 August to 27 September 2021. Hence, it captures some of the impacts from the latest COVID-19 community transmission and lockdown on businesses in New Zealand.

Sentiment weakens sharply in the building sector

The building sector has gone from being the most optimistic to once again the most pessimistic of the sectors surveyed, with a net 43 percent of building sector firms expecting a deterioration in general economic conditions ahead. Confidence in the building sector weakened despite continued solid demand, particularly when it comes to the pipeline of Government construction work. Capacity pressures remain very acute in the building sector, but building sector firms are finding it easier to pass on higher costs by raising prices.

Across the other sectors, the manufacturing sector is also feeling downbeat despite solid demand. Retailers report some easing in demand, costs and the pricing environment. Services sector firms are also feeling downbeat despite stronger demand.

Firms cautious about investment but looking to hire

Uncertainty over how the latest COVID-19 community outbreak will evolve has led to more caution amongst businesses towards investment in buildings, and plant and machinery. However, firms are feeling more positive about increasing headcount in the next quarter, particularly amongst retailers. This suggests that businesses are planning for a rebound in demand when alert level restrictions are relaxed.

Inflation pressures moderate

Despite capacity pressures becoming more acute, businesses report a softening in costs and pricing in the September quarter. Firms report the shortage of skilled labour becoming even more acute, but there was a slight easing in the shortage of unskilled labour. Nonetheless, these developments suggest that while supply-side constraints are likely to keep inflation elevated, overall, there should be a moderation in inflation pressures over the coming year.

Softening in the costs and pricing environment in the September quarter

Source: NZIER

For further information, please contact:
Christina Leung
Principal Economist & Head of Membership Services
Ph +64 21 992 985 | Email christina.leung@nzier.org.nz


The New Zealand Institute of Economic Research has conducted its Quarterly Survey of Business Opinion since 1961. It is New Zealand’s longest-running business opinion survey. Each quarter we ask around 4,300 firms about whether business conditions will deteriorate, stay the same, or improve. The responses yield information about business trends much faster than official statistics and act as valuable leading indicators about the future state of the New Zealand economy. Long term series derived from the survey are held at the NZIER and are available to NZIER members via our website at www.nzier.org.nz