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NZ business confidence rises in July despite Middle East uncertainty

ANZBO data showed inflation expectations for the year ahead fell to 3.1% in July, while oil jumped from about $70 to as high as $100 a barrel after US-Iran hostilities resumed.

Reported · Written up by our desk · Central Banks

New Zealand business confidence improved sharply in July in an ANZ Business Outlook (ANZBO) survey, but the report cautioned that sentiment remains vulnerable to fast changing developments in the Middle East.

According to Action Forex, the overall sentiment reading rose from 36.6 to 56.1, while firms’ own-activity expectations increased from 36.9 to 49.3. The survey also showed business activity versus the same time a year earlier on balance moved to a net 10% of firms reporting higher activity, from a net 9% in June.

The source links the economic picture to energy price volatility, noting that crude oil had receded to around $70 per barrel at the start of July before surging toward $100 after renewed US-Iran hostilities. It said pump fuel prices had barely moved by the end of the survey period.

Action Forex also highlighted easing cost and inflation expectations, with inflation expectations for the year ahead falling to 3.14% from 3.36% and inflation and pricing measures generally softer in July. It added that core inflation is still above the RBNZ’s target and said the Reserve Bank’s policy stance is likely to face constraints as economic momentum returns, after an OCR increase in early July.

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