ANZ Business Survey Shows Elevated But Easing Price Pressures

The ANZ business activity outlook improved to -9.2 in February from -15.8 the previous month, its highest since October 2022. Business confidence also improved to -43.3 from -52, the second consecutive monthly improvement, as the November 75bp hike faded. ANZ notes that the February business survey doesn’t reflect the impact of Cyclone Gabrielle, which hit NZ February 12 to 16, as those affected were unable to respond to the survey. But the results show some improvement in business sentiment going into the cyclone.

• ANZ remarks that the survey period began on January 31, just after the Auckland flooding and that despite the floods sentiment in the Auckland region continued to be more optimistic, especially in terms of employment and profitability, than the rest of the country.
• Inflation expectations only moderated to 5.94% from 5.99% and down from the November peak of 6.4%. Pricing intentions are down but remain high at 58.8 (Dec 62.4). The good news is that price expectations in 3-months time eased to 3.4% from 3.7% and cost expectations to 5.2% from 5.8%. Wages are also easing with 12-month expectations at 4.7% from 5.5%.
• Employment intentions rose to -3.4 from -11.1, the highest since October 2022, implying that the labour market is unlikely to ease significantly.