Nick Innes-Jones
National Construction & Real Estate Sector Leader, Advisory Partner
The May 2025 BDO Business Wellbeing Index shows a disheartened construction sector, where just 49% of business leaders feel positive about their current business performance – down 6% on September 2024 and reaching a record low across all survey waves.
The post-Covid building boom of 2022 has well and truly receded, causing growing concern among construction business leaders regarding their financial status and growth prospects. Only 32% of survey respondents felt positive about their cash flow in the last two weeks and just 27% report feeling positive about business growth, which is a key concern for most of the sectors highlighted in our BDO Business Performance Index. A likely contributor to this low business growth sentiment is the number of construction leaders feeling positive about their business pipeline – just 39% currently and 47% expecting to feel positive in six months’ time.
Construction business leaders have also reported low levels of positivity regarding their progress in meeting tax compliance and commitments. However, this is expected to improve significantly in the next six months.
Economic pressures and financial concerns have impacted every industry in New Zealand, and construction’s challenges have been especially pronounced. Stats NZ shows building activity fell further in the December 2024 quarter after two years of declines, not helped by the ongoing reduction in new home consents. High build and financing costs have exacerbated pressure, however there is hope that recent interest rate reductions may lead to an improved housing market, while also contributing to investment and development activity in the hard-hit commercial sector.
Likely linked to this negative business sentiment is a further drop in current and future wellbeing, with both the WHO-5 score and future wellbeing measures for construction business leaders reaching record low numbers. Wellbeing is often linked to business and financial performance, so while it’s not a surprise to see low wellbeing scores for construction leaders given the current conditions, it is a concern.
The good news is that construction business leaders’ expectation for the future is more positive across nearly all business performance metrics, including overall business performance, business growth, cash flow and financial performance. This may be a sign that construction business leaders see more projects on the horizon – perhaps boosted by the Government’s recent Infrastructure Investment Summit and anticipation of further pending policy focus – including within the upcoming Government Budget.
Nick Innes-Jones