Employers continue to report hiring challenges for skilled workers
Employers in New Zealand are planning to increase staff numbers in the last quarter of the year amid recovering business confidence and despite hiring challenges, according to a new report.
The latest Quarterly Survey of Business Opinion (QSBO) from the New Zealand Institute of Economic Research (NZIER) showed a turnaround in employers' investment intentions.
"A sizeable proportion of firms intend to increase staff numbers in the next quarter," the NZIER said.
Westpac's analysis of the survey put hiring intentions at a net 23%, a strong rise on the previous quarter, according to Michael Gordon, senior economist at Westpac NZ.
It follows a net five per cent of firms that had cut staff numbers in the September quarter, according to the NZIER, and comes despite employers continuing to report challenges in hiring skilled workers.
"Only a small proportion of firms reported it being easier to find unskilled workers," the institute added.
Gordon said firms continue to report that "workers are becoming harder to find, despite the ongoing rise in unemployment" over the last couple of years.
However, he noted that fewer firms cited labour as a factor limiting output this quarter.
Upbeat economic confidence
The turnaround in investment intentions comes in the wake of recovering business confidence in New Zealand. According to Westpac, investment intentions picked up more for plant and machinery than for buildings.
The QSBO showed that a net 40% of firms are expecting a better general economic outlook over the coming months on a seasonally adjusted basis, an increase from the net 14% in the previous quarter.
Gordon said this returned general sentiment to around the levels seen in the December 2025 quarter, before the Middle East conflict.
But he noted that firms' own-activity measures, which more closely track GDP growth, were more subdued. Trading activity over the past three months was slightly weaker than in June, while expectations for the coming quarter rose by four points to a net 15%.
This optimism is widespread across sectors, with the retail sector reporting confidence, a net 57% of retailers expect better general economic conditions in the coming months.
The services sector and the building sector also reported upbeat outlooks for general economic conditions, despite the latter reporting initial pessimism earlier this year.
The manufacturing sector also became more confident in the September quarter as manufacturers reported increased domestic and export demand, despite deteriorating profitability amid intensifying costs.
"The increase in optimism in the September quarter occurred despite renewed conflicts between the US and Iran, which have pushed global oil prices higher again," the NZIER said.
"While the impact of developments in the Middle East on sentiment appears muted for now, ongoing uncertainties over geopolitical conditions and global oil supply remain a headwind for New Zealand's economic recovery over the coming year."
Gordon added that the lift in confidence came despite resurgent fuel prices and uncertainty around the upcoming election. He noted that later survey responses were less confident as higher world oil prices flowed through to prices at the pump, and he cautioned that businesses' expectations remain well ahead of actual conditions.
