New Zealand business survey: Business confidence -65 (prior -40)

Q2 Quarterly Survey of Business Opinion (QSBO) from the New Zealand Institute of Economic Research

Twin headlines are:

Business Confidence Q2: -65, weakest since March 2020

• prior -40

Capacity utilisation Q2: 93.4%

• prior 97.1%

More:

• net 1% of businesses reported a decline in their own trading activity in the June quarter
• services and building sectors were most downbeat in the June quarter. a net 71% of services sector firms and net 70% of building sector firms expect a worsening in conditions. for both these sectors
• retailers are also feeling downbeat, with a net 61% of retailers expecting a worsening in general economic conditions over the coming months
• Businesses are continuing to pare back on investment plans in the face of uncertainty over the continued impact of the covid-19 outbreak, geopolitical tensions abroad and higher interest rates

Despite the very soft readings in the survey the RBNZ remains on a rate-rising course. A key reason is, as the survey points out:

Inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term pressures intensify further

• Despite the shakier outlook for the New Zealand economy, inflation pressures have continued to intensify. more firms are facing increased costs, which are being passed onto customers in the form of higher prices. nonetheless, overall profitability amongst the firms surveyed remains weak.