ANZ survey shows sentiment recovering from April’s -10.6 but cost pressures and weak retail activity persist amid RBNZ rate hike signals.
New Zealand business confidence rose 21 points to +10 in May, reversing April’s -10.6 reading, as activity expectations improved across most sectors. Manufacturing led the recovery at +28, while retail remained subdued at +8, reflecting persistent cost pressures.
Cost expectations held near record highs, with 90.4% of firms reporting higher expenses, unchanged from April. Inflation expectations eased slightly to 3.63% for the year ahead, though pricing intentions remained elevated at 56.7. Employment intentions turned positive at +3.4, but year-on-year employment fell to -5.2.
The Reserve Bank of New Zealand’s recent signals of faster and larger rate hikes added to concerns over sustained inflationary pressures. While wage intentions showed no signs of broadening inflation, indicators aligned with RBNZ forecasts rather than suggesting downside risks.