ANZ Business Outlook survey

Business confidence fell 26 points in March, down from 59 to 33 as firms digested the potential implications of the Middle East shock. The late-month responses averaged -23. Other forward-looking activity indicators also plummeted. 

In terms of impacts already being experienced, past activity fell from 23% to a net 18% of firms reporting stronger activity than a year ago, with a particularly sharp fall for retail (down 20 points to +5) and construction (down 16 points to -13). Late-month responses averaged 0, not boding well for next month. 

Inflation indicators were higher, unsurprisingly. The net percent of firms expecting to raise prices in the next three months rose 7 points to 60% (67% in the late-month sample), while the average amount by which firms expect to raise their prices rose from 2.0% to 2.4% (3.3% in the late-month sample). 

The net percent of firms expecting cost increases (85%, up from 79%) is the highest since early 2023, while a monthly number equivalent to the late-month read (93%) hasn’t been since mid-2022.

Business confidence fell 5 points in February, but at 59 it is still very strong. Overall, the activity indicators across the survey are solid. 

Inflation indicators were mixed. The net percent of firms expecting to raise prices in the next three months fell 4 points to 53%, giving up about half of last month’s jump, while the amount by which firms expect to raise prices eased a touch from 2.1% to 2.0%. Expected wage growth is rising, and the net percent of firms expecting cost increases (79%) is the highest since July 2023.

Business confidence retreated 10 points from its 30-year high of 74 in December, but at 64 it is still extremely strong. Expected own activity dropped 9 points, but at 52 it is also historically very high. Past own activity eased 3 points to 26, the second highest read since August 2021, while past employment lifted 3 points to +7, the highest since October 2022.

Inflation indicators were up: the net percent of firms expecting to raise prices in the next three months lifted 5 points to 57%, the highest read since March 2023, and the amount by which firms expect to raise prices also lifted from 1.8% to 2.1%, the highest rate in two years. Wage pressures are starting to lift modestly and inflation expectations are the highest in 15 months.

Business confidence hit its highest level in 30 years in December with a net 74% expecting better business conditions, up 7 points. Expected own activity rose 7 points to net 61%, also its highest level in 30 years. Past own activity lifted 7 points to +29, a strong level (the highest since August 2021), while past employment lifted 6 points to +4, the highest since November 2022.

Inflation indicators also rose a little: the net percent of firms expecting to raise prices in the next three months lifted 1 point to 52% while those expecting cost increases rose 2 points to 76%. One-year-ahead inflation expectations were unchanged at 2.7%.

Business confidence jumped another 9 points from 58 to 67 in November, the highest level in 11 years. Expected own activity lifted 8 points to 53, also the highest in more than a decade. Encouragingly, the optimism seems rooted in recent experience: past own activity leapt from +5 to +21, the highest read since August 2021, while past employment lifted 8 points to -2. 

Inflation indicators were mixed: the net percent of firms expecting to raise prices in the next three months lifted from 44% to 51%, the highest since March, but those expecting cost increases eased 2 points to 74%. One-year-ahead inflation expectations were steady at 2.7%.

Business confidence jumped from 50 to 58 in October, the highest level since February. Expected own activity lifted 2 points to net 45%, the strongest since April. Past own activity was little changed at +5 (but jumped 11 points for the retail sector), while past employment lifted 1 point to -10.

Inflation indicators were little changed: the net percent of firms expecting to raise prices in the next three months eased from 46% to 44% while those expecting cost increases rose 1 point to 76%. One-year-ahead inflation expectations were little changed at 2.75%.

Business confidence was unchanged in September with a net 50% expecting better business conditions, while expected own activity rose 4 points to net 43%, its highest level in five months. Past own activity lifted 4 points to +5, while past employment lifted 1 point to -11. Activity indicators were generally lower in the late-month (post-GDP) sample.

Inflation indicators were marginally higher: the net percent of firms expecting to raise prices in the next three months rose 3 points to 46% while those expecting cost increases rose 1 point to 75%. One-year-ahead inflation expectations lifted marginally from 2.63% to 2.71%.

Business confidence lifted 2 points in August to a net 50% expecting better business conditions, while expected own activity fell 2 points to a net 39%. Past own activity fell 5 points to +1, while past employment rose 1 point to -12. There were some interesting, isolated lifts in the data in the late-month sample following the RBNZ cut, but no generalised confidence improvement evident.

Inflation indicators fell: the net percent of firms expecting to raise prices in the next three months fell 1 point to 43% and those expecting cost increases fell 2 points to 74%. One-year-ahead inflation expectations eased slightly to 2.6%.

Business confidence lifted 2 points in July to a net 48% expecting better business conditions, while expected own activity was flat at net 41%. Past own activity rose 4 points to +6, but past employment fell 3 points to -13. Both are very subdued.

Inflation indicators fell: the net percent of firms expecting to raise prices in the next three months fell 2 points to 44% and those expecting cost hikes fell 3 points to 76%. One-year-ahead inflation expectations were flat at 2.7%.

Business confidence jumped 9 points to a net 46% in June expecting better business conditions, and expected own activity rose 6 points to net 41%, as the global tariff turmoil faded. However, past own activity (the best GDP indicator) fell 3 points to 2, and past employment was flat at -10, both very subdued.

The net percent of firms expecting to raise prices imminently was up 1 point to 46% and the equivalent cost measure rose 6 points to 79%. One-year-ahead inflation expectations were steady at 2.71%.

Business confidence fell 12 points to +37 in May, and expected own activity fell 13 points to +35. However, late-month responses were higher than the early-month ones. Meanwhile past own activity (the best GDP indicator) fell from 11 to 5, while past employment fell back into negative territory at -10. Pricing and cost indicators eased. One-year-ahead inflation expectations lifted marginally from 2.65% to 2.71%; we’d call that pretty steady. 

Business confidence fell 9 points to +49 in April, while expected own activity fell just 1 point to 48. More positively, past own activity (the best GDP indicator in the survey) jumped 10 points from 1 to 11, while past employment jumped 8 points, from -6 to 2. Most forward-looking activity indicators were sharply lower in the late-month responses. Pricing and cost indicators indicate margin squeeze from ongoing cost pressures. One-year-ahead inflation expectations were little changed at 2.65%.

While business confidence was flat at +58 in March, expected own activity rose 4 points to +49. Past own activity (the best GDP indicator) lifted 4 points to 1, while past employment lifted 1 point to -6. Pricing and cost expectations rose again, both up 3-4 points to the highest in a year or more. One-year-ahead inflation expectations rose 0.1%pts to 2.6%.

Business confidence rose 4 points to +58 in February, while expected own activity eased 1 point to +45. Past own activity (the best GDP indicator) fell 3 points to -3, while past employment was flat at -7. Pricing and cost indicators were mixed. One-year-ahead inflation expectations eased from 2.7% to 2.5%. 

Business confidence fell 8 points to +54 in January, while expected own activity eased 4 points to +46, still both very high. Past own activity (the best GDP indicator) was stable close to zero, while past employment continued to lift, though at -7 it remains in contraction. Pricing and cost indicators lifted, with the downward trends that have been in place over the past year showing signs of flattening off. Inflation expectations lifted a touch but remain within the target band at 2.7%. 

Business confidence eased 3 points to +62 in December, but expected own activity rose 2 points to +50, and past own activity (the best GDP indicator) jumped 10 points to 0. Past employment fell 1 point to -13. Pricing indicators and inflation expectations were little changed, but there was a surprising 7-point jump in cost expectations from a net 63% to a net 70% expecting higher costs in the next three months.

Business confidence eased 1 point to +65 in November, but expected own activity rose 2 points to +48. Experienced own activity rose a point to -10, while past employment lifted from -15 to -12.

Pricing intentions fell 2 points to a net 42% of firms intending to raise prices in the next 3 months. The average amount by which they intend to raise eased from 1.7% to 1.6%. In good news for the RBNZ, inflation expectations dropped markedly from 2.8% to 2.5%, likely impacted by the Q3 CPI print of 2.2% y/y.

Business confidence rose another 5 points to +66 in October, while expected own activity ticked up 1 point to +46.

Experienced own activity lifted 8 points to -11, its highest level since March. Retail bucked the trend, giving up its recent gains. That may be related to the fall in consumer confidence seen this month. 

Pricing intentions lifted 1pt with a net 44% of firms intending to raise prices soon. The average amount by which they intend to raise them drifted up to 1.7%. Inflation expectations eased 0.1%pt to 2.8%. 

Business confidence rose 10 points to +61 in September, while expected own activity lifted 8 points to +45.

Experienced own activity rose 4 points to -19, led higher by retail and construction, but experienced employment fell 5 points to -20. 

Pricing intentions rose 2 points to a net 43% of firms intending to raise prices soon. The average amount by which they intend to raise them was steady at 1.6%. Inflation expectations were flat at 2.9%. 

Business confidence soared 23 points to +51 in August, the highest level in a decade. Expected own activity jumped 21 points to +37, a 7-year high. Experienced own activity rose just 1 point to -21, still very weak. 

The large increases in confidence and activity expectations (including employment and investment intentions) were evident already in the responses gathered at the very beginning of August. The roughly one third of responses that came in after the Reserve Bank cut the OCR didn’t change the results a great deal.

Pricing intentions rose 3 points to a net 41% of firms intending to raise their prices in the next three months. The amount by which they intend to raise them ticked up from 1.4% to 1.6%. Inflation expectations dipped from 3.2% to 2.9%, their first sub-3% read since July 2021.

Business confidence jumped 21 points to +27 in July, and expected own activity lifted 4 points to +16. To be fair, these up/down responses are relative to an ever-weaker starting point (past own activity dropped 6 points to -24), so there’s a bit of a “well, can’t get any worse” vibe to it. 

Pricing intentions lifted 3 points to 38, but inflation expectations eased from 3.5% to 3.2%. Inflation indicators were softer in the later sample.

Business confidence fell 5 points to +6 in June. Expected own activity was unchanged at +12, while past activity was flat at -18. Pricing intentions fell 7 points to 35, with a sharp fall in the expected magnitude of price increases as well. Cost expectations also dipped, and inflation expectations eased from 3.6% to 3.5%.

Business confidence fell 4 points to +11 in May. Expected own activity fell 2 points to +12, and past own activity lifted 2 points to -18. Activity indicators improved for the manufacturing sector off weak levels, but were mixed to weaker elsewhere. There was a welcome easing in inflation indicators. Pricing intentions fell 5 points to 42 while inflation expectations eased from 3.8% to 3.6%.

Business confidence fell 8 points to +15 in April. Expected own activity fell 9 points to +14, and past own activity dropped 13 points to -20. Pricing intentions increased 2 points to 47 while inflation expectations were unchanged at 3.8%. Cost and wage pressures remain very high.

Business confidence fell 12 points to +23 in March. Expected own activity fell 7 points to +23. Past activity eased 2 points to -7. Pricing intentions eased a little and inflation expectations fell from 4.0% to 3.8%. Cost and wage pressures remain very high, however.

Business confidence eased 2 points to +35 but expected own activity rose 4 points in February. Reported past activity has a good correlation to GDP. It rose 1 point this month but is still in the red at -5. Inflation expectations fell from 4.3% to 4.0%. Pricing intentions eased from 50% to 48%, continuing their sideways trend of recent months.

Business confidence rose 4 points to +37 in January, while expected own activity fell 3 points to +26. The recent dramatic lift in residential construction gave up quite a bit of ground this month. Inflation expectations took a step lower, but the proportion of firms expecting to raise their prices remains stubbornly high.

December 2023: We wish you a merry Christmas (PDF 1.82MB)
Business confidence rose 2 points to +33 in December. Expected own activity rose 3 points to +29. The vast majority of indicators lifted, including the backward-looking measures. Inflation expectations took a decent step lower, but the proportion of firms expecting higher costs and the proportion intending to raise their prices both rose. Indeed, pricing intentions are the most reliable lead indicator for inflation, and they have stopped falling in recent months.

 

November 2023: Another month of honeymoon (PDF 1.35MB)
Business confidence lifted another 8 points to +31 in November. Expected own activity rose 3 points to +26. For much of the sample this is their first survey response since the election. Inflation indicators were a little mixed. The fall in economy-wide pricing intentions has stalled, but they continue to trend lower for retailers.

 

October 2023: (Almost) All in the Black (PDF 1.23MB)
Business confidence jumped 21 points to +23 in October. Expected own activity rose 12 points to +23. Activity indicators jumped in the early-month sample and jumped again in the second half of the month. Inflation indicators were mixed – the RBNZ needs to see more progress.

 

September 2023: Hanging in there (PDF 1.48MB)
Business confidence rose 6 points to +2 in September. Expected own activity was flat at +11. Many activity indicators slipped a little. Inflation expectations fell slightly to finally fall below 5%. There’s still a long way to go, but things continue to move slowly in the right direction. 

 

August 2023: Goldilocks is in the building (PDF 1.19MB)
Business confidence lifted another 9 points in August to -4, the highest read since mid-2021. Expected own activity also jumped 10 points, to +11. All activity indicators lifted. But we can have our cake and eat it too, for now, at least: inflation indicators continued to ease. 

 

July 2023: Running an orange light (PDF 1.16MB)
Business confidence lifted another 5 points in July to -13, the highest read since September 2021. Expected own activity eased 2 points to +1. The economy is slowing, but certainly not coming to a sudden stop. Inflation indicators mostly crept slightly lower, but cost expectations lifted, and the proportion of firms expecting to raise wages increased.

 

June 2023: A sigh of relief (PDF 1.47MB)
Business confidence leapt 13 points in June to -18, the highest read since November 2021. Expected own activity jumped 8 points to +3; hardly strong, but the first time in 14 months that it’s been in the black. Inflation indicators generally eased. Reported inward freight disruption fell to a fresh low.

 

May 2023: Prepared for the worst; hoping for the best (PDF 1.26MB)
Business confidence and expected own activity both lifted in May. Business confidence lifted 13 points from -43.8 to -31.1, while expected own activity rose from -7.6 to -4.5. Inflation indicators generally eased, though cost expectations remain stuck at very high levels.

 

April 2023: On track (PDF 1.34MB)
Business confidence and expected own activity were all but unchanged in April. Inflation indicators continue to fall, as the RBNZ will be expecting, given their forecast for inflation to fall steadily over the next year.

 

March 2023: RBNZ gaining traction (PDF 1.60MB)
Business confidence was unchanged in March at -43, and expected own activity was flat at -9. Inflation indicators continue to inch lower – going in the right direction, albeit painfully slowly.
 

February 2023: Battling on (PDF 1.29MB)
Business confidence lifted another 9 points in February to -43. Expected own activity also lifted 7 points to -9. Pricing intentions continue to inch lower but inflation expectations remain stuck around 6%. There was a marked drop in expected wage growth, however. There was little difference between the early-month and late-month responses.
 

January 2023: A slightly happier New Year (PDF 1.61MB)
Business confidence bounced 18 points in January as the shock of the November Monetary Policy Statement wore off a bit. Expected own activity also bounced, up 10 points to -16. Inflation pressures remain intense. Pricing intentions rose 3 points, and cost expectations rose 7 points. Inflation expectations remain stuck around the 6% mark. There’s good reason for the RBNZ to keep hiking a while yet (we are picking +50bp in February).