New Zealand’s business community is showing tangible signs of recovery and optimism even as broader economic forecasts remain cautious. In the latest Pulse of New Zealand Business survey conducted by investment firm Forsyth Barr, firms across construction, freight, retail and hospitality reported a marked rise in demand and stronger profit expectations compared with previous rounds. The results paint a complex picture of an economy where confidence is improving in pockets yet lingering uncertainty still binds overall sentiment.
The survey also reveals a shift in concerns among business leaders, with competition and technology adaptation becoming bigger challenges than weak demand. For many across the regions and among mid‑sized enterprises, recent months have felt like the start of a long‑awaited turnaround.
Businesses See a Step Up in Demand and Profit Outlook
In the latest Pulse of New Zealand Business survey, around 30 percent of firms reported stronger demand over the past three months, while roughly 50 percent expect higher profits in the next 12 months. These figures are significantly above those in the past two surveys, where demand growth was mostly in the low teens and profit expectations sat around 30 percent. This shift suggests many firms have moved from merely stabilising to actively recovering.
For sectors that rely heavily on consumer spending and freight flows, increased activity indicates that the economy may be gaining traction after a period of mixed signals. Construction firms, in particular, are reporting better enquiries and tender confirmations, while retail outlets say foot traffic and purchase values are improving.
Key Business Sentiment Shifts
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Demand rising: Around 30 percent of respondents saw a rise in demand.
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Profit optimism grows: Half of firms now expect profits to rise in the next year.
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Concerns pivot: Focus has shifted from deteriorating demand to competition and technology adoption.
These improvements are consistent with other data showing regional businesses outperforming major urban centres such as Auckland, Wellington and Christchurch by a widening margin, particularly in freight, agriculture and regional services.
Regional Recovery Outpacing Cities
One of the most striking patterns from the survey is the outperformance of regional firms compared with urban counterparts. The recovery has broadened beyond metropolitan markets, with regions like Waikato, Bay of Plenty, and South Island districts telling a brighter story of demand, employment and investment activity. The findings suggest that regional economies are at the forefront of this upswing, possibly due to strengths in primary industries such as agriculture and logistics.
Meanwhile, Auckland, Wellington and Christchurch — traditionally the economic engines of the country — have lagged in some indicators, reflecting sector shifts and slower rebounds in urban‑dependent industries like commercial real estate and certain services.
Business Confidence Still Mixed Despite Better Performance
While firms are optimistic about their own prospects, perceptions about the direction of the national economy have improved only modestly. This disconnect between business prospects and macro confidence highlights a cautious mood among executives who may be benefitting from sector‑specific gains but still see national headwinds.
This mirrors broader data from other surveys like the NZIER Quarterly Survey of Business Opinion, which has shown fluctuations in business confidence tied to demand strength and global conditions. Although some measures of confidence rose in late 2025, overall sentiment remains far from uniformly strong across all sectors.
The mixed picture aligns with ongoing economic complexities, including soft demand in certain markets and subdued investment intentions, despite pockets of optimism.
Competition and Technology Adoption Emerge as Top Concerns
A notable shift in the latest survey is that increasing competition and the need to adapt to new technology are now among the most frequently cited business concerns — overtaking deteriorating demand, which had dominated in previous reports.
Executives from several sectors noted that:
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Technological adaptation is crucial as digital tools and automation reshape business operations.
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Competition is intensifying, particularly in retail and freight where new players and pricing dynamics are driving margins thinner.
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Firms feel pressure to modernise systems and adopt digital strategies to remain competitive and attract customers in an evolving marketplace.
This evolving risk profile suggests that, while demand has recovered to an extent, businesses are now preparing for longer‑term strategic challenges instead of short‑term survival struggles.
Medium‑Sized Business Leaders Most Positive
Medium‑sized enterprises stood out as the most confident group in both recent trading conditions and future outlook. These businesses often straddle the gap between nimble small firms and large corporations, allowing them to pivot quickly while having resources to invest in growth opportunities.
Many medium‑sized operators highlighted their ability to respond fast to changes in customer demand, manage costs and invest selectively in technology. This resilience has translated into stronger internal optimism compared with smaller firms that may have tighter cashflow constraints or larger firms with slower strategic turnaround.
What This Means for the New Zealand Economy
The latest survey findings are significant because they reflect a broader movement from contraction and uncertainty toward resilience and cautious optimism among New Zealand businesses. Rising demand and profit expectations suggest that economic activity is strengthening in key areas, even if overall confidence about the national economy is more guarded.
Economists believe that such survey improvements often precede measurable economic growth, particularly when firms start to invest more, hire staff and expand operations. However, they also note that business confidence surveys can be influenced by short‑term shifts and may not always match GDP outcomes.
Yet the shift away from deteriorating demand as the main concern to future‑oriented challenges like technology adoption could signal a turning point in how New Zealand firms are planning for growth rather than survival.
For regions outside the main cities, the trend is particularly encouraging. Increasing demand and relative growth in agriculture, freight and service sectors may help diversify economic strength and reduce reliance on traditional metropolitan drivers.
As businesses navigate the next months, the country’s economic story may increasingly be written outside the urban centres, with regional resilience playing a central role in driving recovery.
