Tony Alexander reveals mixed economic optimism and concerns in latest survey
Each month, Tony Alexander (pictured above), an independent economist, taps into his subscriber base from Tony’s View to gather insights across various sectors of New Zealand’s economy.
This month, responses from 467 participants provide a real-time glimpse into the business landscape, highlighting customer flows, pricing pressures, and strategic planning among other key factors.
The findings reveal a mixed bag of optimism tempered by real concerns.
Key findings and business concerns
The survey illuminated growing concerns among businesses regarding compliance costs, the economic forecast, the undervalued New Zealand dollar, and political instability.
While plans for advertising expenditure remain subdued, there is a noticeable uptick in investments towards technology and machinery, signalling a shift towards modernisation and efficiency.
Primary business concerns for 2025
Businesses expressed various apprehensions for the upcoming year, with the economy and customer demand consistently topping the list of worries. Notably, traditional concerns like business profitability and interest rates have been overshadowed by the rising costs of compliance.
Economic sentiment and currency concerns
The survey indicated a significant shift in sentiment regarding the New Zealand dollar.
Previous worries about the dollar being too high have all but vanished, replaced by concerns that it is now too low, affecting economic competitiveness.
Adjustments in business spending
When asked about future spending, the majority of businesses are focusing on strategy development and customer retention, with a growing emphasis on technology and digitisation over maintaining a social media presence.
Interestingly, spending on climate change mitigation remains low, reflecting the current economic pressures and priorities.
Trends in employment and input costs
While the availability of good staff is reported to be improving slightly, thanks in part to the current 5.1% unemployment rate, there is a minor increase in concerns regarding input costs. However, this rise is mild and not yet indicative of a significant inflation problem.
Future business prospects and staff morale
Looking forward, a net 44% of businesses expect an improvement in revenue over the next year, buoyed by lower interest rates and a gradual recovery in economic activities.
However, only a small percentage of businesses anticipate improvements in staff morale and mental health, pointing to ongoing pressures from rising costs and tight margins.
Banking and finance sector trends
In the banking and finance sectors, there is a noticeable increase in interest towards equipment investment and a lift in borrowing inquiries, the survey found.
The financial advice and mortgage broking sectors are also seeing a revival in activity, driven by decreasing borrowing rates and improved buyer sentiment in the property market.
Despite this, the competitive nature among banks remains intense, with some holding margins better than others.
