Since my last Channel offering, there have certainly been some economy-based ups and downs for us all to contend with, and at the moment, no one seems sure when this economic rollercoaster ride will end.

The October Official Cash Rate (OCR) announcement from the Reserve Bank of New Zealand (RBNZ) saw a cut of 50 basis points, which was very welcome and signalled the RBNZ’s intentions to try and stimulate economic growth, whilst also hoping to keep inflation under control. While a number of economists believed that this level of OCR reduction could and should have been made earlier, it’s a welcome step in the right direction. The banks have, in general, reacted positively by reducing their home loan and business loan interest rates, which should, at some point, help to ease the financial pressures for home and business owners alike.

It is also hoped that as people start to see an increase in their disposable income, they will start to spend more, which in turn will help to improve businesses’ cash flow, ideally resulting in more businesses reaching the holy grail of sustainable economic recovery. If only life were that simple. With the cost of food, power, council and water rates increasing, it could still be a while before people feel financially comfortable to increase their spending on all but the essentials.

Unfortunately, while the reduction in the OCR with the possibility of further reductions is a real positive, some other negative issues are still holding people back from spending. One of these issues is job insecurity, which is prevalent at the moment due to the increase in unemployment in recent times. While figures from Statistics NZ in October showed a 0.2% increase in the number of filled jobs in August, total jobs were still down 0.7% on a year ago, with the construction sector losing over 10,000 jobs, so it’s understandable that some people are reluctant to part with their money.

The lack of spending isn’t just consumer-based. A recent business survey indicated a drop in business confidence in the September quarter, with some businesses still reducing staffing levels and others reducing their investment in plant, machinery and buildings over the coming year.

All of the above said, there remains a feeling that 2026 will see the positive economic growth that we were all hoping for this year come to fruition. I sincerely hope that this will be the case, with the old saying “better late than never”, which I think sums up the situation perfectly.

With the ongoing uncertainty as to when we will all enjoy our own version of economic sustainability, please keep supporting our local businesses whenever you can. 

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kevin@businessnh.org.nz