Business Confidence in New Zealand Increases Despite Challenges
WELLINGTON, Oct 6 (Reuters) – New Zealand’s business confidence has seen a significant uptick in the third quarter, even amidst rising fuel prices and geopolitical tensions. A recent survey by the New Zealand Institute of Economic Research (NZIER) indicated that a net 43% of businesses anticipate improved general conditions, a marked increase from 8% in the previous quarter.
The survey, conducted between September 9 and 28, coincided with a notable surge in fuel prices, driven by escalating tensions between the US and Iran. Despite these challenges, NZIER reported that the effect on business sentiment has been relatively muted.
On a seasonally adjusted basis, expectations for business improvement rose to 40%, up from the previous quarter’s 14%. Furthermore, the measure of capacity utilization increased slightly to 91.0%, from 90.8%.
Christina Leung, principal economist at NZIER, noted the disparity between current weak activity levels and optimistic future expectations. The latest data indicates a stabilization of costs and pricing, suggesting a modest risk of higher fuel prices affecting broader inflation.
Leung also stated that NZIER does not foresee the need for additional cash rate hikes this year. New Zealand’s central bank had recently increased the cash rate by 25 basis points to 2.75%, indicating potential future tightening but emphasizing a cautious approach given the evolving economic outlook.
