Business confidence slipped slightly in August but remains strong overall - ANZ
ANZ says this suggests the bounce-back is already underway.
Business confidence in August showed a slight decline, according to ANZ's latest business outlook survey, although the overall sentiment remains robust. The confidence index dropped by two points to 54, while the measure of businesses' own activity fell marginally by one point to 48. Generally, a score above 50 in this survey indicates a highly positive outlook, suggesting that more firms anticipate economic conditions improving than worsening.
According to ANZ's research team, both confidence and own activity remained elevated in August. However, the most promising development was an increase in past activity, which rose by six points to 16, largely due to the services sector performing exceptionally well this month. This surge in past activity suggests that the recovery from the economic downturn is already underway.
The survey also revealed mixed inflation expectations. The cost of living became more expensive, with inflation expectations rising from 3.14 percent to 3.26 percent, primarily influenced by the fluctuating oil prices. Consequently, a larger number of firms now foresee cost increases and are planning to pass these costs onto their customers by raising prices. Despite these rising costs, ANZ noted that the magnitude of anticipated cost increases is gradually decreasing.
Employment intentions exhibited a slight uptick from the previous month. ANZ expressed optimism about the overall survey results, highlighting that despite a volatile global economic climate, businesses are eager to progress and move forward. They emphasized that while concerns regarding costs and pricing persist, there is widespread confidence that the worst of the situation is behind them, indicating that the economy is gradually regaining its footing.
This survey precedes the Reserve Bank's Monetary Policy Statement, set to be announced on Wednesday. The Reserve Bank is widely anticipated to raise the cost of borrowing by 0.25 percentage points, bringing the rate to 2.75 percent.
Written by urgent.news from RNZ Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
