NZ business confidence was mixed in June - ANZ

ANZ Bank chief economist Sharon Zollner says the bank's latest business survey painted a mixed picture of the economy over June. Photo / Dean Purcell

One of New Zealand’s most closely watched business confidence surveys has painted a mixed picture of the economy over June.

ANZ said its latest survey showed business confidence - those expecting better business conditions - jumped nine points to a net 46% in the month.

Businesses’ expected own activity rose six points to a net 41%, as the global tariff turmoil faded.

However, past own activity fell three points to two, and past employment was flat at -10, both very subdued.

The net percentage of firms expecting to raise prices imminently was up one point to 46% and the equivalent cost measure rose six points to 79%.

One-year-ahead inflation expectations were steady at 2.71%.

“Forward-looking activity indicators generally lifted in June as tariff noise subsided, as signalled last month by the more positive responses seen in the latter part of May,” ANZ chief economist Sharon Zollner said.

“However, in terms of what firms are experiencing, things remain pretty soft,” Zollner said.

Pricing and cost expectations were still too high to be called consistent with the Reserve Bank’s inflation forecasts.

“However, inflation expectations are well behaved,” Zollner said.

Competition and low turnover continued to be the biggest problems for businesses, she said.

“It’s fair to say the agriculture sector is less weighted down by problems than other sectors currently, based on their broader survey responses,” she said.

“It continues to be a difficult business environment for many.

“Costs are still going up and margins are being squeezed, with low turnover and a highly competitive environment making it very difficult to recoup margins.

“Dark clouds globally are impeding risk-taking, though we did see the rebound in many forward-looking activity indicators that was presaged by the intra-month data in May,” Zollner said.

While economic growth in the first quarter was “decent” at 0.8%, quarter on quarter, the omens for the second quarter were not looking so positive, she said.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.