Kimberley Symon
Advisory Partner
Kia ora and welcome to the eighth BDO Business Performance Index (BPI) report. Launched in June 2022, the BDO Index is a unique twice-yearly study exploring the leading issues impacting business performance, then sharing practical business tips to help business leaders navigate these.
Our latest report (October 2025) is based on a nationwide survey of more than 530 business leaders during September. The report highlights overall business performance sentiment has declined markedly since our previous report released in May 2025. However, there are some notable variations in the issues faced and relative performance across business sectors, sizes and regions.
In many cases, the challenges encountered within your business are often shared by others in your industry. We encourage you to consider the insights and practical tips outlined in this latest report in addressing your leading business issues and opportunities. The report has three sections - Business performance (insights below), Detailed findings & Business tips.
In starting the conversation, business journalist Madison Malone, spoke with Kimberley Symon, BDO Advisory Partner, to unpack the latest report highlights.
Since our May 2025 report was released during the week leading up to the unveiling of the Government’s Budget, much has changed in our economic and political environment:
“The declining financial performance outlook aligns with what we are seeing in the market. With consumers tightening their belts and reducing discretionary spend, along with increasing unemployment, significant pressure continues to be felt in the retail, hospitality and tourism sectors. Businesses are cutting costs to weather the storm. We are seeing pervasive financial pressure across the building and property sector from suppliers to construction companies to developers, a lack of pipeline and demand is starting to bite.
For a number of businesses under financial pressure, the theme of ‘survive to 2025’ is quickly turning into ‘find a fix in 2026’. Businesses that can ride out these challenging times will emerge more agile and resilient and will be able to take advantage of improving economic conditions. With a big driver of our economy being consumer sentiment, businesses are hoping the recent OCR cuts will improve consumer confidence and drive an increase in discretionary spend.”
Rees Logan, BDO National Business Restructuring Leader.
Our previous BPI survey was undertaken during the lead-up to the Government budget being unveiled in May 2025 and revealed that 57% of business leaders were feeling positive about their overall business performance (all or most of the time). At that time, businesses performance sentiment had rebounded from a record low (51%) in September 2024, off the back of a new wave of OCR reductions and interest rate easing.
In contrast, the September 2025 survey highlights that overall business performance sentiment has dropped back to a new record low - with just 48% of business leaders nationally feeling positive about this in the past two weeks. Business leader sentiment towards their financial performance, often a key driver of overall performance, has also fallen to 35% - equalling the record low recorded in September 2024.
Looking ahead to 2026, expectations remain subdued. Business leaders’ expectation of business performance sentiment in six months’ time is at a record low since reporting began in 2022, with 56% of business leaders nationally expecting to feel positive about this. However, as is typical, the forward view is slightly more optimistic than the present.
“BDO’s Business Performance Index (BPI) reveals a picture of weak business activity and weakened confidence in the future prospects for the economy, although businesses still expect the economy to improve over the next 12 months. This is consistent with both NZIER’s forecasts for the New Zealand economy and the findings of its most recent Quarterly Survey Of Business Opinion (QSBO).”
Jason Shoebridge, Chief Executive, NZIER
“The combined and continued impacts of a soft housing market, building slowdown (particularly in New Zealand’s largest city; Auckland), along with restricted discretionary household expenditure, mean we are commonly seeing businesses engaged in related sectors face financial challenges – including retail, hospitality and construction.
Beyond newer entrants and smaller players, we are now seeing more entrenched, longstanding businesses feel the brunt of the challenging economic context. Our ray of light will come when we see more of these established businesses show confidence to hire and invest – signalling the economy has turned a corner. In the interim, those businesses which address a core market need, have a clear proposition, serve diverse markets and bring in fresh thinking to support robust planning, will more often demonstrate financial resilience.”
Kimberley Symon, BDO Advisory Partner
The top five concerns for business leaders nationally regarding their business performance reflect the challenging economic context, centring on core pillars of day-to-day business financial viability including cash flow, financial performance and business pipeline – the latter featuring in the top five for the first time.
“With businesses currently being squeezed between weak demand and increasing costs, it is not surprising that economic factors and cash flow are the two most concerning issues for businesses reported in the BPI.”
Jason Shoebridge, Chief Executive, NZIER
Five lowest scoring attributes. % Feeling positive (last 2 weeks) all or most of the timeMid-market business leaders ($5M+ average annual turnover and 20+ full-time employees) have a slightly more positive outlook, with 58% feeling positive about their overall business performance in the last two weeks (all or most of the time).
In general, North Island business leaders are more positive about their overall business performance than their South Island counterparts.
Interestingly, performance of systems and technology is a top five issue for mid-market businesses, but not the general business sector population (skewed by New Zealand’s sizeable population of small businesses). This likely reflects the heightened importance of systems and technology as businesses gain scale, including future-proofing their systems to leverage AI opportunities.
“With heightened awareness of the business opportunities presented by AI, we’re seeing a growing focus among business leaders on ensuring their business systems are future-proofed to capitalise on these. As businesses grow, it’s typical to see them grapple with transitioning from disparate, manual systems to integrated technology platforms which bring both short and longer-term efficiencies. The businesses that make this transition most effectively, are typically those which are utilising advisers to navigate the sea of information and potential solutions to ensure they are selecting the best technology in line with their business goals.”
Carl Ferner, Partner, BDO Digital
There is also some regional variation in these leading issues:
Business leaders in the tourism sector have experienced a record decline in overall business performance sentiment between six monthly surveys, falling by 29% since May. They are followed by retail business leaders who recorded a 10% drop. Just 40% of tourism business leaders feel positive about their business performance (lower than any other sector) and 48% of retail business leaders. These sectors continue to be impacted by the high cost of living and inflation on consumer demand, along with labour and skill shortages. Expected cruise ship passenger numbers for the coming season are down 20% on last summer, a similar decline to the previous year, impacted by high costs for operators. Tourism sector challenges may also be contributing towards the lower overall positivity recorded among South Island business leaders.
Business performance sentiment among construction business leaders remains at a low point nationally (49%) – the same as when last surveyed in April 2025. Concerningly, construction is the only sector surveyed where expected future business performance sentiment (in 6 months’ time) is lower than currently (47%). While the latest survey was undertaken just prior to the recent OCR cut (50 basis points) on 8 October, this implies that conditions for construction business leaders will likely remain challenging for some time yet before they improve.
Not surprisingly, Agribusiness leaders (74%) and Māori business sector leaders (64%) are showing the strongest business performance sentiment off the back of recent favourable revenue from dairy, sheep & beef and kiwifruit produce – coupled with the lower NZ Dollar and interest rates. Māori business sector leaders (64%) are the next most positive and typically show a correlation with Agribusiness sentiment trends in the BPI survey, likely due to their connection to aligned industries and regional economies often vested in agriculture, horticulture, fisheries and forestry.
“As highlighted in our 2025 BDO Construction Sector Report, it’s a mixed bag for construction business leaders right now. Our July report showed that civil and infrastructure leaders appear best placed. Auckland has been hit by a pronounced slowdown in residential activity and reduced pipeline of commercial projects, leading to more concern here about forward work and cash flow. These issues are echoed across the rest of the North Island, meanwhile Canterbury has witnessed more construction activity than in 2024. Looking ahead, the recent drop in the OCR and the Government’s Investment Boost initiative should encourage property owners to actually commence projects that have been sitting on hold awaiting signs of improving economic conditions. Construction business leaders will continue to monitor inflation levels, margins, sector risks and resource availability as the spending from the thriving agriculture sectors filters into the larger centres.”
Nick Innes-Jones, BDO Construction Sector Leader
Our challenging economic context is not only impacting business performance and commercial outcomes, but also the wellbeing of New Zealand business leaders: More business leaders attribute financial concerns as their reason for feeling less mentally healthy than normal (in the past two weeks) than any other matter. The internationally-recognised WHO-5 Wellbeing Index score for business leaders also follows a consistent trend to business financial sentiment – both of which are now at an all-time low.
Looking ahead, expectations of overall business performance are at a record low, with just 56% of business leaders expecting to feel positive about this in 6 months’ time. However, as is typical, the forward view is slightly more optimistic than the current sentiment (48%). With the latest BDO Index survey being undertaken just prior to the recent OCR cut (50 basis points) on 8 October, it will be interesting to see if a further wave of interest rate cuts can stimulate a sustained improvement in business performance sentiment.
An outlook from NZIER Chief Executive, Jason Shoebridge:
“NZIER believes that the economy will improve in the next year but this improvement will be more muted than had previously been thought. The findings of the BPI, in terms of both expectations and activity, are consistent with what is happening in the economy. While businesses have reason for some confidence in an improvement, albeit slower than previously thought, economic conditions as illustrated by recent data on GDP and inflation remain tough.
NZIER expects recent cuts to the Official Cash Rate (OCR) made by the Reserve Bank will flow through to increased spending and investment. However these effects will take time to manifest due to the structure of New Zealand mortgages. Over 80% of New Zealand mortgages are for fixed periods and around 44% of mortgages are due to be refixed within the next six months. Therefore while we continue to expect lower interest rates to support a recovery, this will take time.
The labour market continues to be soft. The unemployment rate continued to lift, and firms report it being easier to find workers. The uncertainty around the labour market is leading to low consumer confidence which is driving a reduced appetite for buying big ticket items.
The lack of confidence of businesses shown in the BPI is also reflected in decreased business spend. Businesses are reporting increased caution to commit to hiring or investment.
According to the latest QSBO, a net 13% of firms now intend to reduce investment in plant and machinery and a net 20% of firms intend to reduce investment in buildings in the the coming year. These results are in contrast to the previous quarter, where the Government’s Investment Boost initiative announced in May’s Budget appeared to provide more confidence for businesses to invest. That confidence has now waned.
The relatively low and decreasing confidence of the retail sector reflects the lack of consumer confidence and caution of households to spend. However retailers responding to the QSBO appear to have optimism that continued decreases in the Official Cash Rate will lead to increased spending as households eventually face mortgage interest rate relief.
In summary, NZIER believe that businesses surveyed in the BPI are right to be cautiously optimistic about future economic conditions. However given ongoing weak demand and increased cost pressures, it is not surprising to see the BPI report their ongoing concerns about the economy and cash flows”.
As a business owner or leader in New Zealand, it's important to know you're not alone. Accessing support can be as simple as starting a conversation with your friends, whānau, business community or professional advisers. For practical guidance, view our report's business tip library or reach out to your BDO adviser. For wellbeing support, view key contacts here.
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Kimberley Symon