NEW ZEALAND
ANZ’s business confidence measure for April fell to 14.9 from 22.9 and the activity outlook to 14.3 from 22.5. While positive, both are at their lowest since September last year. Cost and wage pressures remained elevated with some easing only in the latter. Inflation expectations were stable at 3.8% but weak demand will make it difficult to pass on higher costs. The RBNZ needs activity to ease to return to inflation to target but this may be a slow journey. Rates are on hold for now.
- Cost expectations rose over 2 points to 76.7, highest in 7 months, which ANZ believes was driven by the pickup in oil prices and the softer NZD. Expected cost increases rose 0.3pp to 3.2% 3m/3m. As a result pricing intentions increased moderately to 46.9 from 45.1 with the expected rise over the coming 3 months up 0.1pp to 1.9%, driven by manufacturing.
NZ ANZ business survey costs/prices
Source: MNI - Market News/Refinitiv
- Wage expectations for the next 3-months moderated 0.4pp to 4% due to weakening labour demand and strong labour supply. The easing was broad based, which is good news for the RBNZ. Wage agreements over the coming year are also expected to moderate to 3% from 3.3%.
- The decline in business confidence and activity was broad based across sectors. Most of the growth indicators deteriorated in April suggesting it will more difficult to pass on rising costs to customers. Employment intentions fell to -0.9 from +3.5, the first negative since July 2023. Investment intentions fell to -3.5 from +3.9 and residential construction to -8.6 from +7.4.
- See ANZ report here.
NZ ANZ business activity vs confidence
Source: MNI - Market News/Refinitiv
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