New Zealand’s business confidence rose 21 points to +27 in July, whilst businesses’ expectations for their own activity edged up 4 points to +16.

This is according to the results of the ANZ Business Outlook survey on Wednesday.

That said, according to ANZ chief economist Sharon Zollner, the findings from July’s survey are a mixed bag.

“Forward-looking activity indicators generally bounced with a bit of a ‘well, can’t get any worse’ vibe to it”, she stated.

Reported past activity, which closely correlates with GDP, declined further, with a net 24% of firms indicating that activity in the previous month was lower compared to the same period last year.

“Most sectors continue to deteriorate, with construction and retail the weakest sectors by quite some margin,” Zollner added.

In addition, the economy-wide indicator was looking weak, she said.

Firms' numerical forecasts for their own selling prices in three months increased across all sectors except services, though this rise did not pose a threat to the existing downward trend, according to Zollner.

The average rose from 1.2% to 1.4%, whereas the construction sector had the lowest pricing intentions at 1%.

“Encouragingly for the RBNZ (Reserve Bank of New Zealand), the 29% of responses that came in after both the RBNZ Monetary Policy Review (10 July) and the CPI data (17 July) showed lower inflation expectations, pricing intentions and particularly cost expectations (interest rates are a cost for many businesses),” she said.

In addition, reported wage increases compared to a year earlier rose from 3.6% to 3.8%, which Zollner suggested might be more significant for the inflation outlook. 

Expectations for wages over the next 12 months remained stable at a level that the RBNZ would likely find satisfactory, The New Zealand Herald reports.

“We’re still in a ‘bad news is good news’ world as far as the RBNZ is concerned, but hopefully not for too much longer,” she commented.

“With increasing evidence that monetary policy has worked and possibly rather too well, there is now a widespread expectation that the RBNZ will commence easing the Official Cash Rate this year.”