New Zealand Business Confidence Improves In May: ANZ

Pessimism among New Zealand’s businesses decreased sharply in May amid a rebound in several activity indicators though inflation worries persisted, survey data from the ANZ showed Wednesday.

The business confidence index survey balance gained 13 points to -31.1 from from -43.8 in April, the ANZ New Zealand Business Outlook survey showed. Economists had forecast a score of 43.4.

The latest reading was the highest since December 2021.

The survey balance for expected own activity rose to -4.5 from -7.6.

The expected inflation eased to 5.47 percent from 5.70 percent in April and marked the lowest since February 2022.

Survey indicators for export intentions, residential construction intentions and profit expectations also improved.

On the other hand, employment intentions eased, but may not all be due to smaller desired staff numbers, the ANZ said. Construction and agriculture led the decline.

This may partly reflect that some long-running vacancies have now been filled as labor supply has increased, the economist added.

The proportion of firms expecting to raise their prices and wages fell, while the share of those expecting costs to increase in the next three months remained stubbornly high, the survey said.

“The RBNZ perceives widespread sogginess across the economy, making them more relaxed about the extra stimulus being provided by super-strong net migration and more fiscal spending this year than anticipated,” ANZ Chief Economist Sharon Zollner said. “We aren’t so sure.”

The economist observed that most activity indicators are well off their lows and rising, while cost and price indicators are inching lower, rather than plunging.

Even the most interest-rate-sensitive sector, construction, is much less downbeat than previously, the economist pointed out.

“We continue to expect that the RBNZ will be back at the hiking table by the end of the year,” Zollner added.

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