Positive expectations for business finances, cash flow and pipelines
Economic and political uncertainty continues to be a major influence on the mindset of business leaders, with current positivity regarding both these external factors scoring equal lowest (34%) among the nearly 20 business performance metrics surveyed. While business leaders are also exhibiting low positivity regarding their current business financial performance (35%), cash flow (41%) and pipeline (43%), these are among the few factors which they expect to be significantly more positive about in six months’ time - and measures which they have a greater ability to directly influence. This outlook suggests a degree of resilience and willing ambition to forge ahead with their business goals, despite continued uncertainty in the external environment.
“This is a challenging time for many business leaders, and the results reflect that. But they're not putting their plans on hold. Despite ongoing financial pressure and uncertainty about the election outcome, many are backing their own ability to lift performance in the months ahead.” – Kimberley Symon, Advisory Partner, BDO Christchurch
Business performance sentiment: Current vs future
% Feeling positive in last 2 weeks* vs % expecting to feel positive in 6 months’ time
El Niño emerges as a key concern for business leaders
Of particular note in the most recent survey, has been the emergence of climate risk management as one of the five lowest-scoring business performance factors.
This is likely due to heightened awareness of the looming El Niño weather pattern and its potential impact on businesses, particularly those connected to agriculture and horticulture. Beyond observing its actual impacts over the upcoming summer, it will be interesting to track if this remains a short-term, seasonal concern for business leaders, or a continued focus. The heightened expected positivity regarding this factor in 6 months’ time (48%), indicates presently many business leaders likely view El Niño as a short-term threat.
More businesses expect net profit margins to improve
Despite an uncertain external operating environment, businesses are becoming more optimistic about profitability.
- 35% of businesses expect net profit margins to increase over the next 12 months, up from 29% in May 2026.
- 46% expect margins to remain about the same.
- Only 19% expect margins to decline.
- Mid-market businesses remain more optimistic than average, with 39% expecting higher margins.
“We know from our conversations with clients that many business leaders are doing it tough. However, what these results also show – and what we're seeing first-hand – is that pressure on financial performance does not necessarily mean their business is standing still. Business leaders are continuing to serve customers, manage busy workloads and pursue growth, even when rising costs, tight margins and cash flow pressures mean that effort is not yet flowing through to the bottom line. That resilience, combined with smart business planning, provides a strong foundation for improvement as conditions improve.” – Kimberley Symon, Advisory Partner, BDO Christchurch
Mid-market businesses are most positive about performance, but not immune to pressure
Mid-market businesses continue to outperform the wider business community across most key indicators, reinforcing their reputation as one of New Zealand's most resilient and growth-focused segments. More than three in five (61%) mid-market business leaders feel positive about their current business performance, compared with 49% across all businesses. Positivity is even stronger looking ahead, with 66% expecting to feel positive about business performance in six months' time, well above the national average of 52%.
Financial sentiment also remains significantly stronger than the broader market. Nearly half (48%) feel positive about their current financial performance, compared with 35% nationally, while 39% expect net profit margins to improve over the next 12 months.
Mid-market businesses also continue to invest for growth. More than one-quarter (28%) intend to actively recruit over the next 12 months, compared with 20% nationally, reflecting greater confidence in future demand and business opportunities.
However, cost pressures also remain a key concern. Three-quarters (75%) expect fuel-price inflation to have a moderate or significant impact on profitability, highlighting the continued challenge of managing operating costs in an uncertain environment.
Agriculture-led recovery maintained
Looking across sectors, agribusiness leaders remain more positive, but their outlook has become more measured. Sixty-eight percent of agribusiness leaders report feeling positive about their current business performance, down 12% since our April 2026 survey. North Island businesses outside Auckland have also recorded the largest improvement in current overall business performance since May, rising from 44% to 56%. The dairying and horticultural heartlands encompassed in this area (from Waikato and Taranaki, to Bay of Plenty), and the businesses that services these, are likely to be key drivers of these survey outcomes.
