According to the latest survey from Grade 2, New Zealand companies' business optimism has reached its highest level since 2021, with a significant proportion of leaders hoping for an increase in revenue next year.
A 2025 Formative Business Research conducted by insights and research institutional issues that examined more than 500 business decision makers across New Zealand between April and May 2025. Now in its sixth year, the study examines the central issues, trends and opportunities facing business owners, CEOs, generals, directors and C-Sweet Leaders.
The survey findings reveal an increase in sentiment, with 45% of respondents expressing greater optimism about their business outlook compared to the previous year. This represents a 12-point increase over 2024, when 34% reported feeling optimistic.
Business leaders identified improved outlooks as driven primarily by business growth (45%), increased customer demand (40%), and strengthening products, services or sites (38%).
“We haven't seen such a long-standing optimism. Business owners are seeing opportunities to grow and introduce new products and services, according to the latest 2°Shaping Business Report,” said Andrew Fairgray, Chief Business Officer of Class 2.
Fairgray said, “We're also increasingly productive. More Kiwi businesses are conditional on the availability and unavailability of recent technological advances like AI, and are beginning to adopt these tools to improve their business.
“In Grade 2, I've always been a big fan of how we can use technology to improve our business by freeing up time and providing opportunities for business owners to improve what they offer our customers.”
Prosperous business
The number of organizations describing themselves as “prosperity” has risen to 19%, tracking it with the revival of optimism following a recent challenging year. Over three-thirds of those surveyed agree that growth is a key target for 2025, with most focusing on increasing profits or revenue.
The growth-oriented outlook is particularly pronounced among large companies, both in terms of personnel and revenue, indicating a shift from a cautious, sustain-oriented approach to a more assertive attitude towards expansion.
Growing productivity
Productivity has also shown improvements, with 46% of businesses reporting that they are more productive than in 2024. The adoption of AI appears to play a substantial role, with one in four showing greater productivity in these technologies and greater acceptance of digital tools within business operations.
There has also been a change in how productivity drivers are perceived, with fewer companies (26%, down from 33% the previous year) believe that hiring more skilled staff is the main path to productivity improvement. This shows that the focus is on leveraging technology rather than talent acquisition.
Andrew Fairgray said: “These findings should be seen as positive signals. This is not about reducing personnel, but empowering talented people who already have them. By adopting the latest technology, New Zealand businesses can unlock new levels of productivity and make the best of their work.
Cost pressure and price adjustment
Despite the spectacular outlook and productivity gains, the challenges continue. Eight in ten companies pointed to rising operating costs over the past 12 months, up from what we saw in 2024. Reducing customer spending and input costs pressures also frequently cited obstacles.
In response, about half of the companies surveyed plan to raise prices within the next 12 months. In addition to rising costs, the pace of price increases itself is expected to surpass the previous year's pace.
In a highly competitive situation, respondents were twice as likely to describe market competition as “health” rather than “poor,” which is a particularly common rating among companies with 51 or more employees.
Support needs
Companies have identified many areas in which support will benefit them over the next year. Cash flow is essential for growth. However, improving technology and increasing digital skills are increasingly valuable.
When asked how the government could support the sector, tax incentives and breaks were most frequently proposed, with many highlighting inflation containment and cost of living as key priorities for economic stability.
