Business confidence saw a modest improvement in July, though many companies are still facing challenging conditions, according to the latest ANZ Business Outlook survey.
The survey showed that the proportion of firms anticipating improved overall business conditions increased by two percentage points to 48%. However, expectations for their own activity remained unchanged at 41%.
According to ANZ, reported own activity over the past month increased by four points to +6, while past employment declined by three points to -13. Despite the movement, both indicators remained at subdued levels, the bank noted.
“It continues to be tough going for many firms,” stated ANZ chief economist Sharon Zollner.
“Most forward-looking activity indicators saw little movement this month.”
In addition, recent activity indicators revealed a broad divergence across sectors, Zollner went on to add.
While agriculture experienced strong growth, both the construction and retail sectors saw a sharp renewed downturn, highlighting the uneven nature of the economic recovery, The New Zealand Herald reports.
“It appears residential builders are giving up on a recovery any time soon, with a sharp drop in construction intentions this month, to the lowest level in a year,” Zollner commented.
Employment levels in July were down across all sectors compared to the same month last year, the ANZ survey showed.
Zollner highlighted that the retail sector, in particular, was experiencing rapid job losses.
Moreover, the survey also pointed to easing inflation pressures, with a decline in the net percentage of businesses expecting to raise prices, as well as those anticipating cost increases during the month.
“We continue to expect that the Reserve Bank’s inflation concerns will gradually pivot from medium-term inflation being too high, to it potentially being too low, paving the way for more monetary easing than is currently envisaged by the Reserve Bank or the market,” Zollner said.
This month, the Reserve Bank chose to hold the Official Cash Rate (OCR) steady at 3.25%, but signalled a strong possibility of rate cuts in the near future.
The central bank cited rising global policy uncertainty and the impact of tariffs as key factors likely to dampen global economic growth.
“This will likely slow the pace of New Zealand’s economic recovery, reducing inflation pressures,” the bank said.