“The fact that construction sector leaders are less positive about economic conditions in this year’s BDO Construction Sector Report, despite 74% of firms having sufficient pipeline of work over the next 18 months, also signals recognition that the current economic conditions are likely to make it harder to replenish that pipeline as current projects are completed.” – Jason Shoebridge, NZIER Chief Executive
This year, supply chain concerns have also joined the three lowest-scoring factors, likely reflecting the impact of ongoing geopolitical uncertainty on fuel pricing. Last year, business leaders were feeling less positive about their ability to leverage and adapt to new technologies (including AI), and supply chain concerns did not feature in the top five.
“Cost pressure and labour availability are likely to remain persistent challenges for construction businesses. If project timing softens or clients become more selective, demand and pipeline confidence will become even more important. Technology and AI are shifting from emerging opportunities to practical tools for improving productivity, reducing administration and supporting better decision-making without adding unnecessary overhead.” – Bjorn De Nijs, Construction Partner, BDO Southern Lakes & Central Otago
Combined with persistent cost pressures, particularly fuel and materials, this is contributing to a more constrained outlook for the sector. The 2026 BDO Construction Sector Report reflects a sector that remains stable, but under increasing pressure, with business leaders focused on managing costs and maintaining performance in an uncertain environment.
“Looking ahead, the next six to 12 months could feel similar to the current environment if geopolitical uncertainty, particularly conflict in the Middle East, continues to influence costs and confidence. In an election year, there is also a risk that decision-making slows, projects are delayed, and uncertainty builds across the pipeline. For construction businesses, that makes it even more important to stay close to pricing in risk, cashflow, margins and forward work.” – Martin Veitch, Construction Partner, BDO Christchurch
The chart below depicts construction business leader positivity in relation to 19 business performance attributes surveyed - in the last two weeks, in 6 months’ time and in comparison to their 2025 sentiment.
Business performance sentiment current vs future
% of business leaders feeling positive (all or most of the time)
This year, business leaders expressed greater positivity regarding internal and controllable factors such as risk management, compliance, systems performance and employee motivation. While positivity generally improves regarding most business performance metrics when looking six months ahead - particularly for supply chains - the uplift is uneven, highlighting a sector that clearly feels less at ease with external influencers which shape the sector’s outlook - namely external economic and political conditions.
This year, we also asked construction business owners about succession planning, including their confidence in the continued leadership and ownership of their business. Encouragingly, 73% said they feel confident in this area, suggesting many owners have a degree of confidence in their business continuity beyond the current operating environment. Confidence was highest in Auckland, at 79%, and lowest in the South Island, at 68%.
Looking at cash flow, just over half of business leaders (53%) are currently feeling positive about this, yet only 48% expect to feel positive in six months’ time, indicating uncertainty about future work. However, there is more positivity about cashflow in 2026 than in 2025.
Similarly, just under half of all respondents expect to feel positive about their business growth in six months’ time, lower than currently (52%).
Hot topic snapshot
A range of topical factors stand out as top-of-mind for construction business leaders in successfully navigating the economic landscape over the year ahead. Together, these provide a clearer picture of how businesses are balancing cost pressure, financial risk and investment decisions as economic conditions remain challenging.
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