New Zealand business confidence dropped in Feb 2026 due to higher rates and tighter credit, despite positive outlooks and strong manufacturing and agriculture sentiment.

New Zealand business confidence fell to 59.2 in February 2026, down five points, due to rising interest rates and tighter credit conditions, though sentiment remained positive. Firms’ outlook for their own activity improved slightly, while inflation expectations hit a 2024 high at 2.93%, and wage growth expectations rose to 3%, the highest since April 2024. Despite the Reserve Bank’s forecast for headline inflation to return to its 1–3% target by Q1 2026, persistent cost and pricing pressures challenge that outlook. Manufacturing and agriculture showed strong confidence, but construction activity cooled. Overall economic activity remains solid, though profitability and investment indicators weakened.