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New Zealand business confidence improves as inflation risks persist
NZIER said a net 10% of firms reduced staff during the quarter, while more than half reported higher costs, and pricing pass-through rose to a net 41%.
Business confidence in New Zealand improved in the June quarter, according to the NZIER Quarterly Survey of Business Opinion, with a seasonally adjusted net 12% of firms expecting economic conditions to improve over coming months, up from a net 1% in the previous survey.
Action Forex attributed the sentiment rebound partly to easing global fuel prices after a US-Iran Memorandum of Understanding that guaranteed ship passage through the Strait of Hormuz, which helped reverse pessimism linked to earlier Middle East tensions.
Despite the improvement, demand remained subdued. A net 1% of firms reported stronger activity in their own businesses, firms stayed cautious about capacity, and hiring and investment signals were soft, including a net 10% reducing staff and a net 3% planning to cut spending on buildings, plant and machinery over the next year.
Action Forex also highlighted renewed inflation pressure in the survey results, with firms reporting higher costs rising from a net 37% to more than half, and the proportion able to pass costs through to customers increasing to a net 41%. The survey period ended before the latest US-Iran tension escalation and renewed surge in oil prices, which could add further pressure as New Zealand heads toward its general election in November.