December 6, 2022

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Confidence -0.4% (prior +1.8%) & Activity outlook +29.1% (prior +27.1%)

2 min read

ANZ New Zealand Business Outlook, preliminary for June 2021

  • business confidence -2 points to -0.4%
  • activity outlook +2 points to +29.1%

From ANZ’s report (in brief):

  • Activity indicators were mixed. 
  • Investment intentions jumped 6 points, consistent with the 4-point lift in capacity utilisation.
  • Profit expectations a 2-point gai
  • while export intentions also rose
  • However, headline business confidence and employment intentions eased. 
  • Expected costs rose another 5 points to a net 85.6% expecting higher costs ahead. A net 62.8% of respondents intend to raise their prices, up 6 points, another record in data that goes back to 1992. For context on just how spectacular that record is, the previous high before this year was 47.4% in 2000. Inflation expectations continue to lift – at 2.33%, they are close to the 2% RBNZ CPI target midpoint, but they’re still rising.

ANZ add:

  • Shipping disruptions, rising global commodity prices, the higher minimum wage, labour shortages due to both the closed border and uneven sector growth are creating a perfect storm for the supply side of the economy at the same time as demand is holding up much more than firms (or economists!) had anticipated. Headline inflation is set to jump over the next six months as a result, but it’s best to focus on wage growth and inflation expectations for clues regarding when the Reserve Bank might conclude they can no longer look through inflation pressure and simply wait for temporary pressures to subside, necessitating a higher OCR

Bolding abiove is mine. The RBNZ will be watching inflation developments very closely indeed. Its a global (central bank) consensus that inflation is transitory. We’ll see. 

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