Business confidence has surged to its highest level in more than a decade, with firms reporting a marked improvement in activity as the economy shows early signs of stabilising, according to ANZ’s latest Business Outlook survey.
Headline confidence rose 9 points in November to a net 67%, the strongest reading in 11 years. Expected own activity — a key forward indicator — lifted 8 points to a net 53%, also the highest in more than a decade.
Firms are also reporting stronger recent trading conditions. Past own activity climbed from +5 to +21, the best result since August 2021, while past employment rose 8 points to -2.
Inflation indicators were mixed. The share of firms expecting to raise prices over the next three months increased from 44% to 51%, the highest since March, while those expecting cost increases eased slightly to 74%. One-year-ahead inflation expectations held steady at 2.7%.
ANZ chief economist Sharon Zollner says the pickup in activity is now being reflected across most sectors.
“Reported past activity is suddenly looking much brighter for every sector except construction, though it is off its lows too,” Zollner says. “Reported past employment is also rising, off weaker levels.”
She says pricing intentions have firmed while cost expectations remain largely unchanged.
“Firms’ expected average costs and price changes over the next three months show the agriculture sector has the lowest expected cost inflation, while construction has the lowest pricing intentions. Reported wages and expected wage increases were little changed.”
Regionally, Wellington remains the weakest in both actual and expected activity, although it still improved in the latest survey.
“The lift in past activity this month was broad-based regionally, but was particularly dramatic in Auckland and the South Island outside of Canterbury,” Zollner says.
She says the improvement is notable because it appears to be supported by stronger experienced activity rather than sentiment alone.
“Green shoots are looking well established and it is particularly encouraging that the improvement in sentiment is rooted in an improvement in experienced activity, not just hope.”
Zollner says ANZ does not expect the Reserve Bank to cut the OCR again this cycle unless conditions change materially.
“With the recovery underway and CPI inflation at the top of the target band, we don’t expect the RBNZ to cut the OCR again this cycle barring unexpected developments.”
ANZ’s full report is attached.
