Kiwi business leaders' optimism highest since 2016

Business leaders have given their verdict on the progress of the current Government in this year's Mood of the Boardroom report. 

Scoring highest in terms of optimistic mood in this year's survey, which quizzes over 100 CEOs and board chairs across sectors in New Zealand, was the real estate industry. The sector topped the list with an average score of 4.33/5, skyrocketing from last year’s 2.60/5. In healthcare and pharmaceuticals, utilities, energy, and extraction, confidence was also strong with each scoring 4.00 out of 5. The agriculture and agribusiness sector followed these with a score of 3.86 and, in the retail and consumer goods sector, optimism reached 3.33/5.

Franchize Consultants' Dr Callum Floyd reflected on the survey's findings in relation to New Zealand franchising. "I think the reported findings and insights would resonate with most New Zealand franchisors," he says.

"2024 continues to be a tough year for many franchise networks and their franchisees. And I’d expect that whilst most will be more optimistic about the year ahead into 2025, than they were six months or a year ago – no one really knows when business activity will really improve. That means for many, 2025 may continue to be another tough year."

Construction and the entertainment/leisure sectors were among those with the lowest levels of confidence currently, both scoring 2.00/5. At the bottom of the optimism index was education, receiving the lowest score of 1.80/5.

Dr Floyd says, "Within the population of franchisors and their respective franchisees, there will be a difference in expectations by sector – as there are franchising companies strongly contributing to some of the sectors highlighted, including real estate, construction, hospitality, education and supermarket/convenience retail.

"It is important to note though, that some franchising companies are thriving in sectors where others aren’t – due to their specific structure, strategy, management and leadership."

Meanwhile, Westpac New Zealand has shown confidence in its predictions of an OCR drop to 4.25% by the end of 2024. In the bank's latest economic statement released on 2 October, Chief Economist Kelly Eckhold says, "We are changing our forecasts for the OCR and now expect the OCR to move more quickly to neutral than previously forecast. We now see two consecutive 50bp cuts in the OCR in the October and November meetings which will take the OCR to 4.25% at the end of 2024.

"The projected step up in the pace of easing in October is a more finely balanced decision (perhaps a 60% probability) whereas the probability of a larger easing in November looks much higher. We anticipate a much slower, highly data dependent and uncertain path lower in the OCR in 2025. We have pencilled in 25bp cuts in each of the February and May Monetary Policy Statements taking the OCR to the longterm terminal rate of 3.75% by mid-2025."

Watch the launch of Mood of the Boardroom 2024 or read more in the series of related articles here.  Franchize Consultants published their annual Franchising Confidence Index in February of this year.

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