New report reveals 17% of businesses reduced staff in March quarter
Employers across New Zealand remained cautious in hiring during the first quarter of 2025 amid weak demand, according to the latest Quarterly Survey of Business Opinion (QSBO).
The QSBO, as released by the New Zealand Institute of Economic Research (NZIER), revealed that employers are currently "holding off" on hiring and investment.
It found that a net 17% of firms reduced staff in the March quarter, while two per cent expect to cut more jobs in the next quarter.
Aside from hiring, employers are also cautious in investment, with a net four per cent of firms planning to cut back on investment in buildings, while a net two per cent are planning to reduce investment in plant and machinery.
"This reflects the fact that firms are still holding off on hiring and investment until they have more conviction about a sustained recovery in demand," the NZIER said in a statement.
The cautious approach to hiring comes in the wake of weak demand, according to the report, which found that a net 21% of firms reported a decline in trading activity during the March quarter.
Despite this, the report showed that a net 23% of firms are expecting general economic conditions to improve in the coming months, up from the nine per cent in the previous quarter.
"Similar to the previous quarter, there was a contrast between firms experiencing weak demand and expecting an improvement in the next quarter," the NZIER said.
Economists from Kiwibank said the improved business confidence was "some much needed good news in a sea of worry."
"Business confidence improved in the March quarter – despite weak domestic demand and the tumultuous global backdrop," the economists said in their analysis.
"The results are somewhat surprising given that domestic greenshoots are few and far between, and that the global growth outlook is clouded by potentially destructive developments in US trade policy."
The QSBO poll was carried out between February 27 and March 31, closing just before US President Donald Trump imposed a 10% tariff on New Zealand as part of his sweeping retaliatory tariffs.
"The reciprocal tariffs made on Liberation Day – just a few days after the survey close – were far worse than feared. If the survey was taken today, we suspect the responses would look a shade less rosy," the Kiwibank economists said.
Finance Minister Nicola Willis said they are currently studying the implications of international developments following Trump's tariffs.
"We are well-placed as a country, compared to many other countries, because we have such a broad range of trading relationships around the world. And our exporters, in a relative sense, are facing tariffs lower than that by many other countries," the minister said as quoted by Radio New Zealand.
Willis, however, later noted that Trump's massive tariffs on China, a major trading partner of New Zealand, will also have repercussions for the country.
"Events that occur there have impact for us and the same for the United States," Willis told the Morning Report.
In the wake of the tariffs, Willis said the government still has the "right plan" ahead of its annual Budget announcement in May.
"At this stage we are sticking to our fiscal strategy, and that strategy says 'let's do gradual consolidation of very unbalanced books,'" she said. "We have a goal to return the books to surplus by the 2027/28 financial year, so still some time away."
