Surprise construction sector optimism amid prolonged downturn

Monday, 11 August 2025

A high number of construction leaders are confident about the industry’s five-year outlook, according to a Kennards Hire survey.

More than 90% of construction industry decision-makers have a confident outlook about the next five years despite ongoing economic pressures, a new survey reveals.

Kennards Hire has released the results of its Construction Confidence Check survey, run in New Zealand for the first time this year after four years in Australia ‒ and one of the key findings is a surprise.

The company surveyed 600 senior leaders across both countries from mid to large construction businesses, including 205 from New Zealand. Of the New Zealand respondents, 93% were confident about the industry’s growth performance over the next five years.

More than half (52%) reported they were “very confident” the industry would see strong growth in that period.

Construction is experiencing a prolonged downturn and the findings go against the grain of recent reports, including ANZ’s latest business confidence survey, which said residential construction confidence had tanked.

At Steam and Sand in Porirua, Holly Harding has made the upsetting decision to let five staff go. She says the construction downturn is severe, and despite talk of 'hope' from the Government, little work is coming through the door.

Kennards Hire New Zealand general manager Richard White said the survey likely reflected the mood of the broader construction industry, rather than the residential building sector.

The downturn was more pronounced in the residential sector and it was well-known how tough that sector was doing it, with the outlook likely to be flat for some time, he said.

“But in the broader industry, the impact of the infrastructure pipeline, and the signals in the Government’s announcements around, it is becoming evident.

“Previously, a lot of companies were not certain of the pipeline and what work might be coming their way. Now, that has changed, and companies are aware of the projects they can bid for and might get work on.”

On the ground at his company it was evident in the type of tender packages coming out of suppliers and contractors, and the calculations around the hire arrangements they needed.

“There is more positivity, but it will take some time for improvements to come through for many businesses.”

Kennards Hire’s Richard White says the survey findings mirror what his company is hearing from their customers.

Ongoing challenges were highlighted, with 94% of New Zealand respondents saying they had been impacted by tariffs, international shipping costs, and trade regulations in the past year.

Additional costs due to delays or reduced productivity were reported by 96% and 62% said those setbacks could impact up to 20% of a typical construction project's total cost.

Some of the reasons cited for causing delays or reduced productivity were a lack of quality or available materials, a lack of skilled labour to complete specific tasks, outdated equipment and regulatory delays.

Nearly all (99%) of the respondents said their business was exercising caution by implementing or exploring cost-saving measures.

The ways businesses were doing that included investing in technology and equipment for better project management, improved efficiency and operation, actively looking for competitive pricing of materials and services, and leasing equipment rather than owning it.

Kennards Hire was not alone in suggesting there might be some glimmers of light at the end of the tunnel for the construction industry.

Westpac senior economist Satish Ranchhod has said annual new home consent numbers had stabilised and it signalled the downturn was nearing a base, although a lift in activity was still a way off.

A recent survey conducted by NZ Crane Hire found 25% of respondents anticipated their crane needs would increase, while 61% expected demand to remain stable.

And the EBOSS 2025 Builder Sentiment report, released in July, found that while the construction sector remained under significant pressure, the rate of decline in demand had slowed.

Net demand sentiment had improved from -55 in 2024 to -33 in 2025, and 22% of builders said demand had been up over the last year, compared to 12% in 2024.

EBOSS managing director Matthew Duder said while the current situation was challenging, builders did seem to be predicting improvements in the future.

“It may be that we are at, or nearing, the very bottom of the cycle now.”