In July, New Zealand’s ANZ Business Confidence saw a notable increase, jumping from 6.1 to 27.1. Own Activity Outlook also improved, rising from 12.2 to 16.3. Meanwhile, cost expectations fell slightly from 69.2 to 68.2, and wage expectations edged up from 73.5 to 74.6. Pricing intentions saw an increase from 35.3 to 37.6. Importantly, inflation expectations continued their steady decline, falling from 3.46% to 3.20%.
ANZ commented that the economic climate remains one where “bad news is good news” for RBNZ. With mounting evidence that monetary policy has been effective, perhaps overly so, there is now a broad expectation that RBNZ will start easing the Official Cash Rate this year.
ANZ noted that “evidence is mounting that the inflation dragon is on its last legs,” which positions the New Zealand economy for a more robust recovery compared to a scenario where inflation control efforts were only partially successful.
