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NZ business confidence edges up as Middle East tensions ease

A higher share of New Zealand firms raised prices over the past quarter, and more plan further price hikes over the next three months, a signal the central bank may need to monitor for inflation persistence.

Reported · Written up by our desk · Central Banks

New Zealand business confidence improved modestly in the June quarter, according to the NZIER quarterly survey of business opinion, as reported by Action Forex. The net positive reading for the general business situation rose to 12%, up from 1% in the March survey, with the gain attributed to easing Middle East tensions.

Despite the better sentiment, the survey showed little change in the own-activity measures that better align with GDP growth. Action Forex also noted the responses were heavily influenced by timing, with most received on June 10, after the survey was sent, and June 17 following a US and Iran Memorandum of Understanding.

Other activity indicators were mixed, with investment and hiring intentions less negative than in March but profitability expected to worsen further. Firms also continued to report cost pressure, with the net share raising average selling prices surging to 41% from 22% last quarter, the highest since September 2023.

Looking ahead, price pressures were expected to intensify, with a net 54% of firms intending to raise their prices over the next three months, the highest reading since March 2023. Action Forex said the implications for the RBNZ are unclear because the survey horizon is short and may not capture longer-run second-round inflation effects.

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