New Zealand Business Confidence Jumps Despite Fuel Price Surge

New Zealand’s business confidence saw a significant uptick in the third quarter, despite rising fuel prices and geopolitical tensions, according to a report from the New Zealand Institute of Economic Research (NZIER). The survey, conducted between September 9 and 28, revealed that a net 43% of firms anticipated improved business conditions, a sharp rise from just 8% optimism in the previous quarter. Even after seasonal adjustments, 40% of businesses expected better conditions, up from 14% in the prior period.

The survey also indicated that capacity utilization edged up to 91.0%, slightly higher than the previous quarter’s 90.8%. Christina Leung, principal economist at NZIER, noted a divergence between current business experiences, which remain weak, and the more optimistic outlook for the coming quarter. The think tank suggested that while fuel prices surged due to escalating conflicts, the impact on sentiment was minimal.

NZIER’s analysis further indicated that stabilisation in costs and pricing could mitigate broader inflation pressures from higher fuel prices. Leung added that the institute does not foresee any further cash rate hikes this year. This comes after New Zealand’s central bank raised the cash rate by 25 basis points in September to 2.75%, signaling cautious tightening amid economic risks.