New Zealand: Business confidence recovers in May
Latest reading: The ANZ Business Confidence Index rebounded to 10.0 in May, following April’s -10.6. The latest reading moved back above the threshold of 0 that separates optimistic from pessimistic sentiment, marking a partial recovery in business confidence. However, remained well below levels prevailing before the Middle East conflict, suggesting that related uncertainty and cost pressures continued to weigh on firms.
May saw a broad-based improvement across several forward-looking indicators, with firms’ own-activity outlook, investment intentions, employment intentions, profit expectations and export intentions all improving from April. Ease-of-credit expectations also became less negative. Construction indicators were more mixed: residential construction intentions were unchanged, while commercial construction intentions fell. However, reported past activity—which has the strongest correlation with GDP—eased compared with April.
Panelist insight: ANZ Bank analysts, who compiled the business sentiment survey, said:
“These are very uncertain times for businesses. Some of the initial shock appears to have worn off, but activity indicators remain considerably lower than before the Middle East conflict broke out. Pressure on costs and profitability are clear. The retail and construction sectors are reporting a fall in activity in recent months, while agriculture and manufacturing have been more resilient, though we do wonder if the latter might partly be a timing story as firms and consumers attempt to get ahead of potential disruptions and price rises.”