NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Economy / Employment

Inflation spectre in strong recovery

Brian Fallow
By Brian Fallow
Columnist·NZ Herald·
8 Apr, 2014 05:30 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Shamubeel Eaqub.

Shamubeel Eaqub.

NZIER quarterly survey of business paints picture of robust economic conditions and rising interest rates.

A recovery growing stronger and broader, but accompanied by inflation pressures, is the picture painted by the New Zealand Institute of Economic Research's latest quarterly survey of business opinion (QSBO).

The QSBO is the longest-running and most comprehensive survey of business sentiment. The March survey found a net 52 per cent of firms expect the general business situation to improve over the coming year, unchanged from December which was a 20-year high.

Companies' own trading activity, which more closely mirrors economic growth, picked up to its highest level since December 2003 when gross domestic product growth was around 4.5 per cent.

But NZIER principal economist Shamubeel Eaqub does not expect growth to reach that rate this time, pointing to credit expanding at only half the pace it was then.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

The net 25 per cent positive reading for trading activity nationwide reflects the levels in Auckland and Canterbury, but is exceeded in Nelson/Marlborough and Southland at 44 per cent and 33 per cent respectively, while Otago, Hawke's Bay, Northland and Bay of Plenty are languishing by this measure.

Investment intentions are strong. A net 20 per cent of firms expect to increase investment in plant and machinery over the year ahead - the most since 1994 - while building investment intentions are the highest since 1975.

"Hiring intentions eased a touch but remain consistent with robust employment growth," Eaqub said.

A net 16 per cent of firms raised their prices over the past three months and a net 37 per cent expect to do so over the next three months, up from a net 23 per cent.

Advertisement
Advertise with NZME.

Westpac economist Michael Gordon said the lift in the pricing measures was the most substantial change since the previous QSBO and provided further backing for the Reserve Bank's decision to start lifting interest rates now in order to head off inflation pressures over the next couple of years.

"Even so, we are wary of overstating their significance; reported price increases, while rising, are still well below boom-time levels," he said.

Deutsche Bank chief economist Darren Gibbs noted that among retailers the pricing gauges were more subdued, with a net 6 per cent of firms raising prices in the March quarter and a net 16 per cent expecting to in the June quarter - around average levels for these indicators.

"Whilst we doubt that the Reserve Bank will be surprised at the activity indicators in this survey, we think that the pick-up in pricing pressures outside of the retail sector will be noted with some concern.

Discover more

Opinion

John Armstrong: Key fights glare of incoming brighter future

04 Apr 03:15 PM
Opinion

Bernard Hickey: Key's election strategy plays on voters' mortgage fears

05 Apr 04:15 PM
Banking and finance

NZ dollar gains on lure of higher interest rates

08 Apr 05:51 AM
Banking and finance

Dollar holds ground on expectations of upbeat business confidence

07 Apr 08:37 PM

"We expect the bank will view the survey as a green light for a further 25 basis point rate hike on April 24," Gibbs said.

Eaqub said that with pricing pressure widening beyond Canterbury and the construction sector, interest rates would continue to rise, with floating mortgage rates getting to 7.5 per cent over the next year.

The number of firms saying a lack of sales is the main factor preventing them from increasing production continues to decline while labour and capacity constraints are increasingly cited.

But while skilled workers are becoming harder to find, it is no more so than in recent quarters, and reported capacity utilisation actually fell to below-average levels, led by manufacturers and exporters.

"There's no sense that this spare capacity is the result of a drop-off in production by manufacturers," Gordon said.

"In fact quite the opposite. So it may be that firms have made some much-needed investment in new capacity - only three quarters ago, manufacturers' capacity utilisation was approaching record highs. That bodes well for the economy's ability to grow at the sort of rates that the headline confidence measures imply."

Advertisement
Advertise with NZME.

Recovery

• A net 52% of firms expect the general business situation to improve over the coming year.

• A net 20% of firms expect to increase investment in plant and machinery over the year ahead.

• A net 37% expect to raise their prices over the next three months.

Save

    Share this article

Latest from Employment

Premium
Technology

Video game sector jobs up 20.5% with tax rebate, but half of funds unclaimed

09 Jul 05:00 PM
Employment

'Unrelenting': Unions tell Supreme Court Uber imposes 'intensive' control over drivers

09 Jul 04:53 AM
Employment

Uber grilled in Supreme Court on the status of its drivers

08 Jul 03:23 AM

From early mornings to easy living

sponsored
Advertisement
Advertise with NZME.

Latest from Employment

Premium
Video game sector jobs up 20.5% with tax rebate, but half of funds unclaimed

Video game sector jobs up 20.5% with tax rebate, but half of funds unclaimed

09 Jul 05:00 PM

Money left on the table for a second year as MBIE readies review.

'Unrelenting': Unions tell Supreme Court Uber imposes 'intensive' control over drivers

'Unrelenting': Unions tell Supreme Court Uber imposes 'intensive' control over drivers

09 Jul 04:53 AM
Uber grilled in Supreme Court on the status of its drivers

Uber grilled in Supreme Court on the status of its drivers

08 Jul 03:23 AM
Premium
18,800 people booked for NZICC; anaesthetists, ophthalmologists the latest

18,800 people booked for NZICC; anaesthetists, ophthalmologists the latest

03 Jul 10:39 PM
Solar bat monitors uncover secrets of Auckland’s night sky
sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP