New Zealand ANZ business confidence dropped to -0.6 in June, down from May’s 1.8. Own activity outlook rose to 31.6, up form 27.1. Looking at some details, export intentions rose form 12.2 to 13.4. Investment intentions rose from 18.9 to 25.5. Cost expectations rose from 81.3 to 86.2. Employment intentions dropped from 20.5 to 19.7. Pricing intentions rose from 57.4 to 62.8. Inflation expectation jumped further from 2.22% to 2.41%.
ANZ said: “The New Zealand economy is stretched, and firms are clearly facing enormous cost pressures. Increasingly, they are planning on raising their prices in response, with little fear evident that demand will collapse as a result. Shortages of labour are driving investment decisions to a greater extent, but it’s confidence in the economic outlook that will always be key here.
With firms keen to invest and employ, and both cost-push and demand-pull factors suggesting strong inflation ahead, it’s past time to unwind the emergency OCR stimulus. We are forecasting the RBNZ to raise the OCR in February next year, but odds are rising that we’ll see hikes this year.”
