Report highlights industry’s resilience 

Economic and political uncertainty continues to weigh on New Zealand’s construction sector but a new report from consultancy firm BDO suggests there are encouraging signs that many businesses are adapting to the challenging conditions 

Based on a nationwide survey of 180 construction business owners and leaders conducted between April and May 2026, the 2026 Construction Sector Report found overall business confidence has softened over the past year, making it harder for businesses to invest, hire and plan for growth. 

However, the report also indicates the sector remains resilient, with healthy forward workloads, improving labour availability and signs that many businesses are becoming more disciplined in how they manage profitability and risk. 

For example, 76% of businesses have more than six months of confirmed work, providing a solid pipeline despite ongoing economic uncertainty. The report also found profit margins are stabilising or improving for some firms. 

There are also encouraging signs around financial resilience. Despite continued construction insolvencies making headlines, only 4% of respondents believe their own business is very likely to be unable to meet its financial obligations over the next 12 months, compared with 7% across all New Zealand businesses surveyed. 

Labour outlook improving 

Meanwhile, labour shortages also appear to have eased.  

The report found that 71% of respondents said current staffing levels meet or exceed their needs. Of the 29% actively looking for staff, 50% say they are confident they can fill those positions within the next 12 months. 

Nick Innes-Jones, BDO Construction Sector Leader, said it is encouraging that construction businesses continue to feel they have adequate labour supply to meet current needs, particularly given recent migration trends to Australia. 

“The real test will come if pipelines strengthen and construction activity lifts, especially off the back of public infrastructure investment signalled in Budget 2026. Current labour supply confidence is positive but it will need to hold as demand builds,” he added. 

Challenges remain 

Despite some positive signs, the report makes it clear that economic and political uncertainty continue to create challenges. In the past 12 months, nearly 75% of firms surveyed had projects cancelled or put on hold, while the same proportion reported losses of up to $100,000. Nearly 25% had witnessed a business go into liquidation. 

The uncertainty is also affecting profitability. Nearly one third of respondents expected profit margins to decline. 

“The results point to a sector that is not bracing for a further sharp downturn but remains cautious about whether the work ahead can deliver sustainable margins,” the report states. 

Regional differences 

South Island builders reported the strongest forward work position, followed by those in Auckland.  Business owners in the rest of the North Island were positive about current performance but less optimistic about the remainder of 2026. 

Civil and infrastructure firms reported the strongest forward work position and were the most optimistic about profit margin growth, with 28% expecting gross profit margins to increase. 

Subcontractors were the least optimistic about their business performance because of continued pressure across the industry. 

“Most subcontractor respondents reported annual turnover below $10 million, suggesting many are smaller operators with less capacity to absorb volatility,” the report explains. 

Cautious optimism divided 

Despite most businesses (76%) reporting sufficient confirmed work for more than six months, this pipeline is not translating into stronger positivity around profitability for all. 

Construction business leaders are less positive than they were a year ago, with 52% feeling positive about their current overall business performance, down from 60% in 2025. Similarly, 57% expect to feel positive about overall business performance in six months’ time, down from 67% in 2025. 

Innes-Jones said the year ahead is unlikely to be defined by a simple recovery story and that success depends on more than pipelines.  

“Construction businesses may have work ahead but profitability, cash flow and risk management will determine how successfully they navigate the next phase,” he said. 

“Leaders who maintain pricing discipline, monitor project performance closely and manage counterparty (risk of nonpayment) exposure will be best placed to convert pipeline into sustainable performance,” he added. “The sector may not be out of the woods but businesses that protect margin, manage risk and make clear, disciplined decisions will be best placed to move from resilience to recovery.”