NEW ZEALAND: ANZ Business Survey Signals Continued Lacklustre Recovery

The ANZ survey showed little change in business confidence and the outlook in July with the former rising 1.5 points to 47.8 but the latter falling 0.3 to 40.6. It signals that the recovery continues but at a gradual pace. Inflation expectations were stable at 2.7% for the fourth consecutive month but up from February’s 2.5%. Other price/cost components eased, which should reassure the RBNZ ahead of the August 20 rate decision. 

• ANZ notes that most of the forward-looking components of the survey were little changed signalling that the economic recovery is unlikely to accelerate over Q3. Profits were steady around 17, employment rose 1 point to 11.8 (above 7 series average) and investment was stable around 20 (also above average). Exports were slightly higher at 14.6 after 13.9.

NZ ANZ business activity outlook vs confidence

• ANZ expects the RBNZ to become more concerned that medium-term inflation will be too low and as such there will be “more monetary easing than is currently envisaged”.
• Business pricing intentions moderated to 43.5 from 46.3, the lowest since December. Costs were also down at 75.9 after 79.0 but remain above the late 2024 low.
• Residential construction moderated to 16.7 from 44.8. 

NZ ANZ business price/cost components

Source: MNI - Market News/LSEG