New Zealand Institute of Economic Research (Inc)
Media release, 14 July 2026
NZIER Quarterly Survey of Business Opinion
Embargoed until 10 am 14 July 2026
The latest NZIER Quarterly Survey of Business Opinion (QSBO) showed a recovery in business confidence in the June quarter, with a net 12 percent of firms expecting an improvement in general economic conditions over the coming months, on a seasonally adjusted basis. This was a pick-up from the net 1 percent expecting a better general economic outlook in the previous quarterly survey, which was undertaken shortly after the onset of the US-Israel-Iran war that boosted fuel prices. Meanwhile, demand in firms’ own business was broadly flat, with only a net 1 percent of firms reporting increased activity in the June quarter on a seasonally adjusted basis.
This NZIER QSBO was undertaken between 10 June and 7 July. This coincided with a period when global fuel prices began to fall as the US and Iran reached a 60-day Memorandum of Understanding guaranteeing ship passage through the Strait of Hormuz. This recent easing of the fuel crisis appeared to have supported an improvement in confidence in the June quarter. However, geopolitical conditions in the Middle East remain highly volatile and uncertain, with tensions between the US and Iran re-escalating and fuel prices resurging in more recent weeks.
This environment of ongoing uncertainty continues to drive caution amongst firms when it comes to hiring and investment. A net 10 percent of firms reported that they had reduced staff numbers in the June quarter, and a net 1 percent plan to reduce staff counts in the next quarter. A net 3 percent of firms plan to cut investment in buildings, plant and machinery over the coming year. The renewed conflict between the US and Iran and heightened uncertainty over the upcoming general election in November will likely further weigh on firms’ hiring and investment intentions over the coming months.
Sentiment remained mixed across the sectors in the June quarter. The building sector remained downbeat. A net 6 percent of building sector firms surveyed expect a worsening in general economic conditions over the coming months. While this was less pessimistic than in the March quarter, overall pessimism in the sector was driven by subdued construction demand. Building sector firms continued to report declines in both new orders and output in the June quarter. This weak demand continued to put the pricing power of building sector firms under pressure, such that they cut their prices in the June quarter despite increasing costs. This has lowered the profitability of the building sector in the June quarter.
Continued soft construction demand is also reflected in the measure of architects’ work in their own office. Architects’ expectations of the construction pipeline over the coming 12 months have decreased across housing, commercial and Government work. Over the longer-term, architects expect the pipeline of commercial construction work to recover in the next 12-24 months, while the construction pipeline of housing and Government work is expected to remain weak. The subdued housing market, increased costs of fuel and construction materials and heightened uncertainty more broadly, create headwinds for a recovery in construction activity over the coming years.
In contrast, retailers remained optimistic about the outlook and demand over the coming months, as new orders and sales continued to improve in the June quarter. The proportion of retailers who were able to pass on higher costs by raising prices also increased in the June quarter, but retailers reported weak profitability as costs also surged. Sentiment in the services sector saw a turnaround in the June quarter, with firms feeling positive about the outlook ahead, in contrast to the downbeat mood in the March quarter. This was despite a further deterioration in profitability in the June quarter and increased expectations of higher interest rates for the coming year.
Sentiment in the manufacturing sector was neutral, with manufacturers neither positive nor negative about the general economic outlook over the coming months. While manufacturers reported increased domestic and export demand and improved profitability in the June quarter, they expect demand and profitability to decline over the coming months. Heightened uncertainty could have contributed to this caution amongst manufacturers more broadly.
Cost and pricing indicators suggest increased inflation pressures
The NZIER QSBO cost and pricing indicators suggest a lift in inflation pressures in the New Zealand economy in the June quarter. The proportion of firms reporting higher costs rose from a net 37 percent to over half in the June quarter, while the proportion of those able to pass on higher costs by raising prices picked up to a net 41 percent. Cost pressures were particularly acute in the building and retail sectors, but building sector firms had cut prices over the quarter, given continued weak construction demand. Overall, these results suggest a heightened risk of high inflation persisting in the New Zealand economy.
For further information, please contact:
Christina Leung
Deputy Chief Executive (Auckland) & 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 10,000 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 NZIER and are available to NZIER members via our website at www.nzier.org.nz.