New Zealand third quarter business confidence jumps, says think tank

New Zealand's business confidence surged in the third quarter, according to the New Zealand Institute of Economic Research (NZIER). Despite rising fuel prices and geopolitical tensions, 43% of surveyed firms anticipated business conditions to improve, compared to only 8% optimism in the previous quarter. NZIER's quarterly survey of business opinion was conducted from September 9 to 28, coinciding with heightened fuel costs following the escalation of the US-Iran conflict.

The survey revealed that 40% of firms expected improved business conditions on a seasonally adjusted basis, up from 14% in the prior period. Capacity utilization reached 91.0%, an improvement from the previous quarter's 90.8%. NZIER's principal economist, Christina Leung, noted a discrepancy between firms' current weak activity and their expectations of improvement.

The stabilizing costs and pricing indicators suggest a possible risk of higher fuel prices impacting broader inflation, but NZIER does not foresee the need for additional cash rate hikes this year. While New Zealand's central bank raised the cash rate by 25 basis points in September to 2.75% and signaled further tightening, Leung emphasized that any subsequent moves would be measured cautiously, acknowledging mounting risks to the economic outlook.