New Zealand Business Confidence Soars Despite Fuel Price Hikes

New Zealand’s business confidence surged in the third quarter despite rising fuel prices and ongoing geopolitical tensions, according to a report from the New Zealand Institute of Economic Research (NZIER). The think tank’s quarterly survey, conducted between September 9 and 28, revealed that a net 43% of firms anticipated improved business conditions, a significant jump from just 8% optimism in the previous quarter. On a seasonally adjusted basis, 40% of respondents expected conditions to improve, up from 14% in the prior period.

The survey also indicated a rise in capacity utilization to 91.0%, up from 90.8% in the previous quarter. Christina Leung, principal economist at NZIER, noted a divergence between current weak activity levels and more optimistic expectations for the next quarter. She emphasized that firms are experiencing challenges but remain hopeful about future improvements.

NZIER suggested that the recent stabilization in costs and pricing indicators reduces the risk of higher fuel prices contributing to broader inflation pressures. Leung stated that the think tank does not foresee any further cash rate hikes this year, despite New Zealand’s central bank raising the rate by 25 basis points in September to 2.75%. The bank signaled potential tightening ahead but warned of growing economic risks.