Business confidence was little changed in August, with firms largely shaking off the resumed hostilities in the Middle East.
Key results, August 2026
- Business confidence: 53.7 (Prev: 56.1)
- Expectations for own activity: 48.2 (Prev: 49.3)
- Activity vs same month one year ago: 16.4 (Prev: 9.7)
- Inflation expectations: 3.26% (Prev: 3.14%)
- Pricing intentions: 51.0 (Prev: 47.2)
Business confidence was a touch lower in the August ANZBO survey, after having rebounded to around pre-conflict levels in the previous month. The resumption of hostilities in the Middle East since early July has sent global oil prices higher again, but the impact on fuel prices at the pump has been relatively muted this time, and firms appear to be learning to live with this new environment.
A net 48% of firms expect their own activity to pick up in the year ahead, compared to 49% in the July survey. There was a notably strong lift in confidence in the retail sector, offset by declines in the construction and services sectors. Hiring and investment intentions were also largely unchanged from July.
Compared to the same time last year, a net 16% of firms reported a lift in their activity, the strongest reading since April. That result was largely driven by a strong bounce in the agricultural sector, along with a lift in the services sector.
The renewed lift in fuel prices and other petrochemical-related products was certainly noted by businesses. Inflation expectations for the year ahead ticked up to 3.26% after three months of declines, and the number of firms expecting a rise in their costs ticked up again. However, the average expected cost increase slowed to 2.53%, the lowest reading since last December.
While the fast-moving events overseas made it uncertain how much of the July rise in confidence would be sustained, the August result was more decisive. As we detailed in our latest Economic Overview, firms appear to have weathered the disruptions stemming from the Iran conflict reasonably well, though not wholly unscathed. Meanwhile, although inflation pressures have been more contained than initially feared, they were already on the uncomfortably high side even before the conflict began. Altogether that leaves the RBNZ on track to continue removing monetary stimulus in the months ahead.
