New Zealand second-quarter business confidence improves, says think tank

[WELLINGTON] New Zealand’s business confidence rose in the second quarter as fuel prices fell and the fuel crisis eased, a private think tank said on Tuesday (Jul 14).

A net 8 per cent of firms surveyed expected general business conditions to improve compared with 4 per cent pessimism in the previous quarter, the New Zealand Institute of Economic Research’s (NZIER) quarterly survey of business opinion (QSBO) showed.

The survey was undertaken between Jun 10 and Jul 7 and coincided with a period when global fuel prices began to fall as the US and Iran reached a 60-day Memorandum of Understanding guaranteeing ships passage through the Strait of Hormuz.

“This more positive sentiment was likely to reflect the fact that there was an easing in tensions between the US and Iran during the survey period ... However, obviously there’s been renewed conflict between the US and Iran in more recent weeks so it does threaten this recovery in business confidence,” Christina Leung, principal economist at NZIER, said at a media conference.

On a seasonally adjusted basis, 12 per cent expected business conditions to improve versus 1 per cent optimism recorded in the previous period. The survey’s measure of capacity utilisation fell to 90.8 per cent, from the previous quarter’s 91.2 per cent.

NZIER said in a statement that the QSBO costs and pricing indicators suggest a lift in inflation pressures in the New Zealand economy in the June quarter.

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New Zealand’s central bank increased the cash rate by 25 basis points last week to 2.5 per cent and signalled further tightening ahead, saying it must do more to bring inflation back to target as economic momentum rebuilds. REUTERS