Resilience for some. Uncertainty for all. Major biannual study reveals leading business issues and sentiment ahead of Budget 2026
The May 2026 BDO Business Performance Index (BPI) report released today by accounting and advisory firm BDO highlights that more businesses are showing signs of improved underlying financial resilience, but their overall business performance positivity remains weighed down by economic and political uncertainty - handbraking potential near-term growth and investment.
Economic and political uncertainty weighs heavily on overall business performance positivity
Economic and political uncertainty continues to be a major influence on business leaders’ mindset, with overall business performance sentiment remaining at a near record low in the latest biannual BDO Business Performance Index (BPI). The May 2026 BPI report (surveyed during April) tracks business performance sentiment and the leading issues on the minds of 537 business leaders nationwide.
Just under half (49%) of business leaders report feeling positive about their overall business performance (all or most of the time) in the past two weeks, only 1% higher than the record low in the previous 6 monthly BPI survey (September 2025) - in the shadow of global oil price inflation and economic uncertainty fueled by the onset of war in Iran from late February.
Business performance sentiment: Trend
The big business issues ahead of Budget day
Further reflecting the uncertain business context, external economic (27%) and political factors (28%) are now the two business performance measures which business leaders currently feel least positive about, among the 19 attributes surveyed. Positivity with external political factors has declined 7% since September, now ranking second lowest (previously fourth lowest) – likely influenced by the war in Iran and New Zealand’s upcoming General Election.
Looking ahead 6 months, business leaders expect to continue feeling least positive about economic and political issues, followed by cash flow. However, labour supply and cyber risk are expected to move into their five lowest-scoring issues.
Leading business issues for business leaders
Early signs of financial resilience – and potential business growth
“The latest BPI survey findings suggest some businesses are starting to see early signs of financial resilience after several difficult years, but market conditions remain fragile and the international macroeconomic environment is still highly uncertain. Business conditions are moving at different speeds across regions and market segments, with business performance, investment and hiring intentions closely tied to economic exposure, inflationary impacts and industry mix.” – Kimberley Symon, BDO Advisory Partner.
Some positive news comes when looking specifically at current business financial performance however – with 7% more business leaders feeling positive about this than in September (42% in April 2026 vs 35% in September 2025). This is only the second time an improvement in this measure has been recorded. In fact, current financial performance (the third lowest ranking issue in September) now sits just outside of the five lowest-scoring issues for business leaders, indicating a growing degree of resilience for some – during the short term at least – in navigating inflationary pressures driven by rising global fuel prices.
Auckland business leaders are most positive about their current financial performance (57%), higher than those in the rest of the North Island (39%) and South Island (18%). Across sectors, agribusiness and Māori business leaders are most positive about their current financial performance (both 54%).
Business leaders are even more positive when looking ahead six months, with 49% nationally expecting to feel positive regarding their business financial performance.
Further encouraging news comes when looking at business growth: 57% of business leaders expect to be positive about their business growth in six months’ time, significantly higher than at present (42%), and higher than any other aspect of their business performance. This optimism regarding business growth is also notably higher than recorded in September (46%).
Preserving profits by passing on costs
It’s clear that many businesses are presently riding out the fuel price pressures by passing on higher prices to consumers. Looking ahead over the next 12 months, nearly half of business leaders (46%) expect net profit margins to hold steady - and 29% expect margins to improve.
However, notably, two thirds of business leaders (64%) expect rising fuel prices to have an impact on their net profit margins at some point in the next 12 months - indicating that they acknowledge an inability to continue passing on costs in their entirety.
Hot topics - Highlights
Sector sentiment: Construction and retail business leaders challenged
Clearly, this inflationary pressure is already taking its toll on some sectors and markets before others. Construction and retail business owners are currently feeling the pressure most acutely, with cost-of living inflation and softer consumer demand undoubtedly squeezing margins. 40% of business leaders in these sectors are positive about their overall business performance - the lowest across New Zealand’s major sectors and a notable decline since the September survey.
Retail (19%), tourism (36%) and construction (42%) business leaders are least positive about their current business financials. 19% of construction business leaders and 3% of retail business leaders report that they are very likely to be unable to meet financial obligations, or become insolvent, in the next 12 months.
Meanwhile, Agribusiness (80%) and Māori businesses leaders (77%) continue to show most positivity with their business performance, supported by stronger export conditions for agricultural products including dairy, benefitting their rural communities.
After a record fall in overall business performance sentiment in the September 2025 survey, tourism business leaders’ current positivity has rebounded 12% in April, now at 52%. This may be influenced by a seasonal lift in business over the summer period, prior to global fuel price inflation from March.
Mid-market and Auckland businesses show further resilience
Mid-market businesses are holding up better than small businesses, with their added scale offering a further buffer against rising costs and tighter margins. 61% are positive about their overall business performance and 39% expect net profit margins to lift over the next 12 months, compared to 29% among all businesses nationally. 48% of mid-market business leaders are currently positive about their business growth, compared to 42% among all businesses, and 31% expect to be actively hiring staff in the coming year, compared to 17% among all businesses. Fewer report they are likely to be unable to meet financial obligations, or become insolvent, in the next 12 months. Labour supply and workload are currently in their top five issues.
Auckland businesses are generally more positive about their overall business performance (56%), future business performance (62%) and finances (57%) than other regions, potentially driven by their proximity to markets, supply chains and transport links. 51% are currently positive about their business growth, higher than any other region (38% among business leaders in the rest of the North Island and 35% in the South Island). 5% of Auckland businesses report that they are very likely to be unable to meet financial obligations, or become insolvent, in the next 12 months – lower than reported nationally (7%) or in any other region.
Overall business performance positivity among North Island business leaders outside of Auckland has declined 13% since September (now 44%), the only region to track down.
South Island business leaders are currently least positive regarding political, economic and financial factors. However, looking ahead, more South Island business leaders (37%) expect their net profit margins to increase over the next 12 months.
Related resources:
- View the May 2026 BDO Business Performance Index report here.
- Download digital photos of Kimberley Symon, BDO Advisory Partner.
To discuss the findings further or arrange media interviews with Kimberley Symon, please contact Michal Petrus.
More about the report
BDO’s ninth edition of the BDO Business Performance Index (BPI) is based on a nationwide survey of 537 business leaders and owners during April 2026. Launched in June 2022, the BPI is a leading biannual study across a market-representative sample of New Zealand business leaders, exploring the priority issues impacting their business performance. Featuring responses from over 1,000 business leaders annually, across two 6-monthly waves, the Index is New Zealand's largest survey of its kind - and a Gold category winner at the 2024 Research Effectiveness Awards.
For the purpose of the BPI report, mid-market businesses are defined as having $5M+ average annual turnover and 20+ full-time employees.
Each report shares the latest insights, market commentary, and practical tips for navigating the most commonly raised concerns and challenges faced by business leaders, across nearly 20 key business performance drivers. Findings are reported at a national and regional level, as well as for the mid-market and a range of key sectors.