New Zealand’s business confidence fell to its lowest level since mid-2024 in the first quarter of 2026, with a net 4% of firms expecting the economy will deteriorate over the next six months, according to the New Zealand Institute of Economic Research (NZIER) in its Quarterly Survey of Business Opinion released on Tuesday. The latest reading marks a sharp reversal from 48% expecting improvement in the fourth quarter of 2025, as the Middle East conflict drives up costs and weighs on profitability. Forward-looking indicators also deteriorated, with firms pulling back on hiring and investment plans. A net 9% reduced staff in the quarter, and investment intentions for both buildings and machinery turned negative. Across sectors, construction was the weakest, with demand softening and profitability deteriorating amid rising costs and reduced pricing power. In contrast, manufacturing remained relatively upbeat, supported by export demand.