Business – Economy springing into action

A few weeks ago, Treasury announced New Zealand’s Gross National Product for the June quarter – it was 0.9 per cent lower than the previous quarter in absolute terms, and down 1.1 per cent in per capita terms – the true measure. Not a great figure to be fair, but the reaction was overpowering. We were bombarded with headlines, news articles and opinion pieces; the purveyors of doom were in in their element. We even had a front-page opinion piece in the NZ Herald which concluded that New Zealand was broken!! There was an understandable political reaction as well where both our Prime Minister and Minister of Finance were roundly criticised.  

I feel we need to regain some rationality here. What does all this really mean? How should we respond?

Firstly, this is old information. The GDP result has always been three to six months out of date. Demand across the board has been down, revenues and confidence have been down, wallets have been gathering cobwebs. Why is this such a surprise? The economists may have been surprised (they were predicting ^–0.3 per cent to ^–0.5 per cent in absolute terms) but, nothing against economists of course, when was the last time they got a prediction spot on? When we look at the breakdown, goods-producing industries (mainly manufacturing and agriculture) dropped 2.3 per cent, primary industries dropped 0.7 per cent and service industries (professional services, real estate, finance, education and health) were essentially flat. Sure, that’s concerning, but it’s been totally overblown in my view.

How should we respond? Firstly, don’t panic. The September quarter is almost over so the June quarter is old news. 

Secondly, stop reading alarmist opinion pieces. 

Thirdly, get your heads out of the weeds, deal with the brutal facts of your current reality whatever that may be, and start to accept that the recovery has started. Over the past six weeks I have experienced this firsthand. The dam of demand is starting to crack. I have clients across a wide range of industries and I have seen construction equipment suppliers to the hire industry buoyed by a surge in sales, driven by increased demand. In the early stages of recovery in the construction sector, contractors will hire their equipment rather than purchase just to make sure the growth they are experiencing is not another false dawn. It’s not, they are now starting to purchase. I see civil contractors getting set to go (as soon as the weather improves), I see flooring contractors (concrete) being inundated with large-scale tenders for early-to-mid 2026, the like of which they haven’t seen for at least two years. Renovation specialists (apartments and inner Auckland primarily) have experienced a surge in leads, quotes and work, resulting in having to hire extra staff, and marine supply companies are seeing significant growth. Some tradie companies are coming back to life. These stories are real, and they are happening right now. This is not April to June; this is the Spring offensive. Let’s prepare ourselves for better times. Summer is coming.