New Zealand's business confidence has dropped to its lowest level since the BDO Business Performance Index (BPI) began in 2022, reflecting weak economic growth, rising costs, and sluggish consumer demand, BDO said on Thursday.

According to BDO's October Business Performance Index survey, overall business performance sentiment is at a record low. Only 56% of business leaders expect to feel positive about their business performance in six months.

Meanwhile, only 48% of leaders were positive about their business performance in the last two weeks leading up to the survey.

The advisory firm said it is seeing financial pressure across the building and property sector from suppliers to construction companies and developers, as a lack of project pipeline and demand begins to bite.

The decline reflects the "challenging economic backdrop," with GDP contracting 0.9% in the June quarter and inflation rising 3% annually.

"With a big driver of our economy being consumer sentiment, businesses are hoping the recent OCR cuts will improve consumer confidence and drive an increase in discretionary spend," the firm commented.