New Zealand Q4 business confidence jumped higher to +16% (prior -1%)

Quarterly Survey of Business Opinion (QSBO) from the New Zealand Institute of Economic Research (NZIER).

Business confidence in Q4 +comes in at +16%

• the prior quarter was -1%

NZD/USD is up a few tics after the report.

The full report from NZIER is here:

• QSBO shows improved sentiment while actual activity remains soft

In Summary:

1. Improved Business Confidence:

   • A net 9% of firms expect an improvement in general economic conditions, up from a net -4% in the previous quarter.
   • Despite this, weak demand persists, with a net 26% of firms reporting a decline in trading activity.

2. Sector Highlights:

   • Building Sector: Most optimistic, with a net 29% feeling positive about the economy. While new orders and output contracted, a recovery is expected, supported by a strong pipeline of future construction work.
   • Retail Sector: Upbeat about economic conditions despite weak demand. Some retailers raised prices, but profitability remained weak due to cost pressures.
   • Services Sector: Optimistic outlook driven by expectations of reduced household mortgage repayments.
   • Manufacturing Sector: Improved sentiment but less optimistic compared to other sectors. Increased export demand, aided by a lower NZD, was offset by higher costs and reduced pricing power.

3. Cautious Investment and Hiring:

   • A net 17% of firms reduced staff numbers in Q4.
   • Many firms plan to cut investment in buildings, plant, and machinery, awaiting clearer signs of sustained demand recovery.

4. Inflation Pressures Easing:

   • Fewer firms reported higher costs (35%), and only 10% raised prices, signaling softer inflation pressures.
   • Weak demand continues to reduce capacity constraints and inflationary pressures.

Overall, while business confidence and sectoral optimism are improving, weak demand, cautious hiring, and investment, along with easing inflation pressures, reflect a cautious economic environment.

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The QSBO is a closely-watched survey:

• is one of the country’s longest-running business surveys. It provides a insights into the business climate and economic conditions in New Zealand, and the factors influencing business sentiment, such as domestic and international economic conditions, government policies, and other external events.

• surveys businesses across various sectors
• gathers data on business confidence, demand, hiring intentions, investment plans, and other economic indicators
• QSBO findings can vary significantly from one quarter to another

This article was written by Eamonn Sheridan at www.forexlive.com.