NZ Business Confidence Eases
ANZ business confidence eases in August as actual activity strengthens across services.
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Key Points
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Export intentions rose to 31.4 and employment intentions rose to 19.3, signaling improving external demand and hiring prospects even as confidence softens.
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Residential and commercial construction intentions declined, and ANZ noted that revised methodology has made both series less volatile and more representative of activity across firms.
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Past activity, a separate measure from the year-on-year activity, rose to 16, suggesting the bounce-back is underway with services leading the improvement.
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Oil prices are a major driver of inflation expectations, with inflation expectations rising to about 3.26% and cost/inflation dynamics showing a mix of higher prices but moderating cost increases.
New Zealand's business confidence eased in August, falling to 53.7 from 56.1, according to ANZ. Despite the dip, firms remained optimistic — the index stayed well above 50, meaning more businesses felt upbeat than downbeat. The real surprise was actual activity, which surged 16.4 year-on-year, led by a sharp jump in services sectors.
The mixed signals reveal a complex picture. ActionForex noted that export and employment intentions both rose, suggesting firms expect stronger demand and plan to hire. But profit expectations softened, and inflation pressures remained elevated at 3.26%, keeping price-and-wage concerns alive.
Confidence Slips but Stays in Optimistic Territory
ANZ's business confidence index dropped 2.4 points to 53.7 in August, VTMarkets reported. The own activity outlook fell harder, sliding to 48.2 from 49.3. Both moves signal cooling sentiment among New Zealand firms. However, ActionForex emphasized that these readings remain elevated — indices above 50 indicate net optimism, meaning more businesses are upbeat than pessimistic about their outlook.
Actual Activity Strengthens Sharply, Led by Services
While confidence eased, real economic activity painted a brighter picture. Year-on-year activity rose 16.4 points, with services leading the charge. Past activity — a separate measure of recent trading — climbed to 16, signaling that the bounce-back is underway. This gap between sentiment and reality suggests firms are adapting well to improving trading conditions, even as confidence moderates.
Employment and Export Plans Rise Despite Profit Concerns
Export intentions jumped to 31.4 and employment intentions rose to 19.3, signaling stronger hiring and external demand ahead. Yet profit expectations softened, and investment plans cooled. Construction intentions declined across both residential and commercial segments. These shifts suggest firms remain cautious about margins even as they plan to ramp up hiring and pursue overseas sales.
Price Pressures Persist, But Cost Increases May Be Moderating
Inflation expectations edged higher to 3.26%, driven partly by oil price swings. VTMarkets reported that cost-and-inflation dynamics remain mixed — prices are rising, but the size of expected cost increases appears to be moderating. This hints at a potentially stabilizing backdrop for growth. Firms are bracing for higher bills, yet they do not expect runaway cost spirals, keeping wage-push inflation risks manageable for now.
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