The survey showed businesses expecting better profits, planning to invest more, and hold onto staff or even hire. Photo: RNZ / Rebekah Parsons-King
- A new ANZ business survey shows confidence generally at 10-year high
- Firms are most upbeat about their own outlook in seven years
- More firms plan to raise prices, but inflation expectations are down
Business confidence has surged to its highest level in a decade, amid falling interest rates and expectations for an economic upturn.
ANZ's survey for August showed general sentiment rose 23 points to a net 51 percent optimism, the highest since May 2014.
The more closely followed own activity measure showed a 21-point rise to 37 percent optimism, a seven-year high.
Chief economist Sharon Zollner said the business mood had been improving before the recent Reserve Bank (RBNZ) rate cut, but it was coming from a low point.
"Things are looking up, albeit from a pretty dark place for many firms. Not to be a killjoy, but it remains the case that the hurdle for expecting better times ahead is very low: reported past activity, which has a good correlation to GDP (gross domestic product) ... barely lifted, and at -23 (net percent pessimism) remains very weak."
Zollner said inflation indicators were mixed, with more firms expecting to raise their prices than in July, but overall inflation expectations fell back into the RBNZ's 1-3 percent target band.
Will it last ?
Zollner said it was too soon to say whether the burst of euphoria would last and flow into business decisions.
Sharon Zollner. Photo: RNZ / DOM THOMAS
The survey showed businesses expecting better profits, planning to invest more, and hold onto staff or even hire.
"We will be closely watching indicators such as housing auction clearance rates, job ads, PMI (manufacturing) and PSI (services) new orders, and card transactions.
"And the RBNZ will be too. Just as the pace of monetary tightening varied considerably, the speed with which interest rates come down will also be data dependent."
The survey showed a solid lift in expected construction work, although sentiment in the sector was still the weakest of all parts of the economy followed by retail.