BUSINESS LOOKING UP IN 2026

Editors note: Since this article was written just before Christmas 2025, further news media articles and multiple bank reports have affirmed that business confidence remains at a high point, and both the services (retail, hospitality, real estate and IT) and manufacturing sectors are experiencing growth in activity and momentum. Other reports focusing on recent company liquidations and removals played down the net gain in registered company numbers over the past year.

Business confidence booms

The recent strong resurgence in business confidence continued in December according to the latest ANZ Business Outlook survey. General business sentiment rose to a net 73.6, while firms’ own-activity expectations rose to a net 60.9. Both readings are the highest seen in this survey since 1994, according to Westpac’s economists. 

Expectations picked up the most in the services sector, with smaller gains in retailing and construction. Westpac reports that the high level of confidence is also now being accompanied by an improvement in actual performance. A net 29% of businesses surveyed reported that activity was up on a year ago, compared to 21% in November. This was the strongest result seen since August 2021. 

Consumer confidence rises

Consumer confidence has also taken a step up to a level of 96.5 in Westpac’s latest survey of New Zealand households. While that remains below long-run averages, and a level below 100 indicates that there are more households who are pessimistic about the outlook than those who are optimistic, this is still the highest level of confidence seen throughout 2025. 

Underpinning the lift in confidence, households are feeling more optimistic about the outlook for the economy. In fact, the proportion of people who expect economic conditions will improve over the coming year is the highest it’s been since 2021. 

GDP & employment

Following last week’s stronger than expected GDP report, Westpac have revised their forecasts for the coming quarters, predicting a 0.6% underlying increase in the December quarter, although they haven’t revised the overall growth forecast for 2026, which was already a solid 3%. But their economists say that the latest GDP results, plus the improvement in business sentiment, gives them more confidence that the 3% result for next year can be achieved. Westpac are notoriously strong with GDP predictions and 2025’s annual growth rate landed in line with their forecasted +1.3%, the first year-on-year increase seen since June 2024.

Underpinning the GDP figures, household consumption saw a modest 0.1% rise, but there were the expected strong gains in exports of goods and services, as well as a strong lift in business investment (up 3.2%).

As a net 4% of businesses are now saying (in the ANZ Business Outlook survey) that their staffing levels are higher than a year ago, Westpac has also predicted that the unemployment rate has reached its peak at 5.3%, supported by New Zealand's weekly ‘filled jobs’ data, which suggests a lift in employment growth so far in Q4 2025.

Home building activity turns around

At Franchise New Zealand we’ve seen a recent rise in the number of home building franchises actively looking for prospective franchisees, as they seek to stay ahead of the curve with feeding new demand.

Reports show that, after falling sharply between 2022 and 2024, building levels have stabilised since the start of this year and the number of new projects being consented has started to trend higher in recent months. The September quarter building activity report was firmer than expected, showing a 2.8% lift in residential building and a gradual recovery is expected for the coming year.

The level of residential building activity remains around 25% lower than its peak in 2022 and tough trading conditions still prevail. But Westpac economists report increased optimism about the year ahead as a result of lower interest rates, resulting in developers starting to bring more projects to market. 

You can read more in detail or subscribe directly to Westpac's lively economic reports at https://www.westpaciq.com.au/economics