ANZ's chief economist says there's a solid jump for the retail sector of firms expecting to raise their prices. Photo: AFP / Greg Bowker
Business confidence has perked up at the start of the year, although firms are less upbeat about their own outlook and still expecting solid inflation pressures.
ANZ Bank's January survey shows headline confidence rising four points to a net 37 percent, but companies' own outlook dipped to 26 percent optimism.
Chief economist Sharon Zollner said the results were a mixed bag, with inflation expectations sitting at 4.28 percent, and nearly half of firms expecting to raise their prices.
"Inflation expectations took a step lower, but they are still too high at 4.3 percent. Cost and price expectations are holding up, with a solid jump for the retail sector of firms expecting to raise their prices."
"Overall, expected cost rises are still higher than expected price rises, so firms are certainly not expecting to be able to pad margins."
Zollner said the survey pointed to firms thinking the worst of the downturn is over, but the economy was at "a delicate juncture".
"We are forecasting a pretty good outcome compared to some scenarios: The RBNZ has done enough; it'll take a while for that to be incontrovertible but by August they can commence a steady stream of OCR (official cash rate) cuts."
The stubbornness of some inflation components might yet mean the Reserve Bank hiked again to be sure even if it later turned out to be a mistake, she said.
"Although the medicine has been bitter, it's working. We just need those pricing intentions to start playing ball to steer clear of another dose of monetary tightening."
The survey pointed to less positive employment and investment expectations, profit and export indicators and wage growth moving sideways.