Pick up sticks in 2026!

Business owners are asking the same questions heading into 2026: Are we at the bottom? Is it safe to invest yet? When will things turn around? After years of treading water, just trying to stay afloat, the frustration of not knowing when to make a move is wearing thin. Here’s what Bruce thinks is happening.

Capital sat frozen through 2025. By December, it started moving, and the numbers are starting to back that up. For example, unemployment is dropping. However, total full-time jobs have been relatively flat since the last quarter of 2023 at just on 2.3 million jobs, so the reduction in unemployment is mostly due to migration. But as we all know, government sector jobs have declined, so by implication private sector jobs have increased! This is supported by recruitment activity generally increasing in late 2025. The pieces are there, but businesses are still waiting to see if they actually fit together.

Retail sales generally (what consumers are buying), and durables in particular, remained flat, but in the context of the last four years, flat is good! At least the bleeding has stopped, which matters when you’re trying to figure out if it’s safe to start investing again.

The currency conundrum

Our exchange rate with the United States (US) is at a ten-year low, but this is more about the strength of the US dollar. No matter what you think about Trump, the price of his dollar says the world loves him. We are also at a long-term low against the Australian dollar, but this is more fundamentally focused on what is going on in New Zealand.

It is not our trade balances but more our capital flows which seem to have hit a tipping point at the end of last year. I wrote about that last month in my analysis of wealth transfers (read it here).

The silver lining to this currency collapse is our exporters are earning more, and if they are energy efficient, earning more. The most visible impact of a low dollar is fuel prices! Our regions that have more exporters than importers have suffered less in the last four years and are considerably more optimistic than Auckland and Wellington. The turnaround feels like it’s region-led and has finally made its way over the Bombay Hills. That regional confidence is part of what’s driving capital off the sidelines.

Tendering (businesses putting work out for quote) is increasing slightly, but contract awards are still very slow in Auckland and Wellington. The hesitation is still there, but it’s starting to crack.

Capital is breaking camp

What I did notice near the end of 2025 is a change in the behaviour of capital and wealth.

If I had to sum it up, it would be:
“F*ck it, I am sick of standing still, time to start walking!”

The number of deals that were just slow, with a lot of friction and reticence, closed in the last two weeks of December—more pre-Christmas activity than I have seen since 2019.

2026 feels like it’s got a good chance of capital breaking camp, picking up sticks and making investments. For those unfamiliar with the game, pick up sticks is about carefully extracting one stick at a time from a scattered pile without disturbing the rest. That’s what capital has been doing—frozen, scattered, waiting for the right moment to move without causing everything to collapse. Now it’s finally moving, which in turn will drive business activity and employment.

However, 2026 is an election year. Labour’s in-substance realty tax, which is labelled a capital gains tax, may have some dampener on that capital optimism. As Arran wrote in November, the sooner they clarify that, the better. That likely won’t have an impact until the second half of 2026.

My take is that merger and acquisition activity will pick up in the first half, so will start-up activity, and so will leasing and construction. It may be enough to give National a second term by luck rather than good management.

I also sense some momentum building in Auckland property prices, but it doesn’t feel like it will be a runaway train. Holding costs if you have debt will still likely outstrip price growth, at least for 2026.

So yes, things are moving. But don’t mistake movement for momentum. Just because the capital’s moving doesn’t mean it knows where it’s going, and an election year has a habit of making everyone second-guess the direction.