Business sentiment has continued to charge higher as interest rate pressures ease, but activity remains soft for now.
Key results (September 2024)
- Business confidence: 60.9 (Prev: 50.6)
- Expectations for own trading activity: 45.3 (Prev: 37.1)
- Activity vs same month one year ago: -18.5 (Prev: -23.1)
- Inflation expectations: 2.92% (Prev: 2.92%)
- Pricing intentions: 42.8 (Prev: 41.0)
September saw another sharp rise in headline business confidence. It’s now back at levels we last saw in 2014.
Businesses are also feeling more optimistic about their own prospects, with a net 45% expecting trading conditions will improve over the coming year. That’s also the highest it’s been since 2014.
The lift in business confidence follows the start of the RBNZ’s easing cycle in August, with interest rates expected to trend down over the coming year.
But while businesses are feeling more optimistic about the outlook, for now they continue to face weak trading conditions. There were more businesses who reported that sales fell over the past year than reported increases, and many have shed staff.
After trending down over the past year, gauges of inflation pressures have stabilised. While not low, they’re looking more consistent with the RBNZ’s goals than they have for a long time, with inflation expected to be at 2.9% this time next year (the same as in the previous survey).
Overall, today’s results probably broadly match the RBNZ’s expectations, and likely won’t have changed their thinking ahead of next week’s policy announcement: Activity remains soft; inflation pressures have stabilised and are well down on the elevated levels we saw in recent years; and signs of a firming in growth over 2025 are starting to emerge. Against that backdrop, we’re forecasting a 25bp cut in the OCR at next week’s RBNZ policy review. The last piece of key data before the RBNZ meets will be tomorrow’s Quarterly Survey of Business Opinion, which we expect will show similar trends to today’s ANZBO survey.
