Despite challenging trading conditions across key sectors
New Zealand businesses appear cautiously optimistic heading into the end of 2025, with confidence rising slightly after the Reserve Bank’s substantial rate cut, according to Westpac NZ.
Westpac NZ senior economist Michael Gordon said confidence improved from already elevated levels.
“Business confidence picked up a little after the RBNZ’s jumbo rate cut, but from levels that were very elevated in the first place,” Gordon said.
The latest ANZ business outlook survey recorded an eight-month high in general confidence at 58.1, up from 49.6 in September. Firms’ expectations for their own activity also inched up, while perceptions of current business conditions were largely steady compared to the same period last year. A net 5% of firms reported higher activity, and 10% said they employed fewer people than a year ago – both little changed from September.
Sector results were mixed. Retail confidence saw the sharpest improvement, reflecting expectations that lower borrowing costs would stimulate spending. On the other hand, agriculture showed the weakest sentiment, which Gordon linked to falling dairy prices in recent Global Dairy Trade auctions.
“The fall to date has been consistent with our forecast of a $10/kg milk price for this season, but continued falls would present a downside risk,” Gordon said.
Price pressures remain contained but uneven. Firms’ inflation expectations rose slightly to 2.75%, while costs and wage growth expectations edged higher. Despite that, pricing intentions slipped to 43.9, continuing the narrow range seen throughout the year.
Westpac said the survey’s results suggest that businesses remain optimistic about the medium-term outlook even as current activity levels stay subdued. The bank expects economic growth to stay muted through the second half of 2025 before improving next year.
Gordon said lower interest rates, stable commodity prices, and manageable inflation pressures should “support a return to more consistently above-trend growth in 2026.”
