New Zealand Businesses Remain Confident Despite Slight Pullback

New Zealand businesses remain broadly confident, despite a small pullback in August, according to ANZ's latest Business Outlook survey. The standout result was a further lift in reported past activity that ANZ describes as evidence the bounce-back in the economy is already underway.

The survey showed business confidence fell 2 points to 54 and the own activity outlook eased 1 point to 48, though both measures remain at very high levels by historical standards. Reported past activity, however, rose 6 points to 16, driven by the services sector.

Inflation indicators sent a mixed signal: inflation expectations one year out rose to 3.26 percent from 3.14 percent, with all sectors recording an increase, and a growing share of firms said they expect both their costs and their own prices to rise. However, the size of those expected cost increases continues to shrink, easing to 2.53 percent from 2.70 percent.

The net percentage of firms expecting to give wage increases jumped again in August, which ANZ says sits awkwardly against the RBNZ's own wage forecasts and may point to a growing mismatch between the skills firms are seeking and what they can find in the labour market.