New Zealand: Business confidence dips in January
Latest reading: Business confidence fell 10 points from its 30-year peak of 74 in December but remains elevated at 64. Expected own activity declined by 9 points to 52, though this still represents a historically strong level. Past own activity—which has the strongest correlation with GDP—edged down 3 points to 26, marking the second-highest reading since August 2021. Meanwhile, past employment rose 3 points to +7, its strongest result since October 2022.
Inflation indicators strengthened. The net share of firms expecting to increase prices over the next three months climbed 5 points to 57%, the highest reading since March 2023. The average expected price increase also rose, from 1.8% to 2.1%, the fastest pace in two years. Wage pressures are beginning to firm modestly, and inflation expectations are now at their highest level in 15 months.
Panelist insight: ANZ Bank analysts, who compiled the business sentiment survey, said:
“Things are clearly looking up. Both past activity and past employment continue to strengthen, and sentiment about the future is improving as a result. Of course, it’s important to remember that the net proportion of firms expecting activity, investment or profitability to go up is just as much a reflection of where they are now as where they expect things to go. The bar for improvement is low.”