ANZ's business confidence survey found strong signs businesses are growing more positive about the future. Photo: Unsplash/ Patrick Tomasso
- ANZ business survey shows headline confidence at highest since May 2014
- Firms also most upbeat about their own outlook since mid-2014
- More firms expect better profits, investment, steady jobs, wages, inflation
- Retail and construction sectors more cheerful.
The recovery in business confidence has held at a decade high, with firms buoyed by improved trading and expectations of future growth.
ANZ's survey for September showed general sentiment rose 10 points on the month before, to a net 61 percent optimism, the highest since May 2014.
The more closely followed 'own activity' measure showed an eight point rise to 45 percent optimism, also a 10-year high.
Chief economist Sharon Zollner said the business mood was being lifted, in particular, on expectations of improved future economic conditions, although firms were also reporting modest signs of a lift in current trading.
"It's still very weak, but there was a turn higher in the hardest-hit sectors of construction and retail."
She said it appeared that business margins were not under the same pressure, which was feeding into hopes of higher profits and turnover.
The risks of recovery
Weak turnover was now the bigger worry for firms, rather than inflation pressures and the level of interest rates, Zollner said.
And that raised the prospect of a quicker than expected rebound in the economy, which had positive and negative aspects.
ANZ chief economist Sharon Zollner Photo: RNZ / DOM THOMAS
"The ... survey highlights the risk that the economy's response to lower interest rates could be more vigourous than is generally expected."
"A sharper rebound in economic activity than generally anticipated would of course be great news - as long as inflation still returns sustainably to target."
The number of firms planning to raise prices increased for the third month in a row, and the level of planned increases was off its lows.
"But in good news from the RBNZ's point of view, reported wage growth has dropped over the last six months, and no doubt relatedly, cost expectations have dropped steadily as well," Zollner said.
Inflation numbers for the three months ended September are due soon with expectations the annual rate will fall below 3 percent back inside the Reserve Bank's target band.
Zollner said near term data such as retail spending, dwelling consents, and job ads would point to whether financial market confidence of rapid interest rate cuts ahead was justified.