Source: Radio New Zealand
Weak sales were still cited as the chief constraint on businesses. RNZ / Rebekah Parsons-King
- Business confidence improves to highest level since March 2014
- Net 39 percent expect economic improvement vs +17 pct in September survey
- Businesses report better demand, plan to invest and hire more.
- Inflation pressures contained around 3 pct, expected to gradually decline
- Survey suggests annual growth around 1.4 pct, RBNZ to hold interest rates steady
Business sentiment rebounded strongly at the end of last year, with firms reporting improved sales and planning to hire staff and increase investment.
The Institute of Economic Research’s (NZIER) closely followed Quarterly Business Survey for the three months ended December showed a net 39 percent of respondents believed economic conditions would get better in coming months, compared to a net 17 percent in the December survey.
“There is a turnaround in demand, with lower interest rates finally gaining traction,” NZIER principal economist Christina Leung said.
Weak sales were still cited as the chief constraint on businesses, but the pressures were easing, with only 3 percent reporting lower sales in the quarter.
Expectations were for improved growth in the coming quarter, with a net 23 percent forecasting a lift in their own business – up from 10 percent in the previous quarter.
Leung said businesses were increasingly feeling confident about investing in plants and machinery and hiring more stuff.
NZIER principal economist Christina Leung. ABC News
“Firms increased staff numbers and are feeling more positive about hiring in the next quarter.”
However, she said there were signs that firms were finding it more difficult to find skilled staff in the manufacturing and construction sectors, which could point to future labour shortages.
She said inflation pressures were contained with fewer firms expecting higher costs and also fewer expecting to have to raise their prices, which indicated inflation gradually falling back to the middle of the Reserve Bank’s 1-3 percent target band.
Leung said the survey indicated the economy was recovering but the increase in growth was likely to be slower than previously thought, with annual growth about 1.4 percent.
“With demand starting to recover but inflation remaining contained, we expect no further OCR cuts in this monetary policy cycle.”
“We forecast the OCR to trough at 2.25 percent until the Reserve Bank.. commences increasing the OCR in the second half of 2026,” Leung said.
The manufacturing sector was the most optimistic of respondents, followed by service industries.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
