Key business leaders now see house prices falling by less than they expected three months ago, a survey the Reserve Bank watches very closely when making monetary policy decisions has found.
And the business people appear to see the economy bouncing back much earlier than they expected three months ago.
The RBNZ Survey of Expectations is a New Zealand-wide quarterly survey of business managers and professionals. Nielsen conducts the survey on behalf of the Reserve Bank. Respondents are asked for their expectations of future outcomes of a range of key macroeconomic data.
While the business leaders still see house prices dropping over the next 12 months they now expect just a moderate drop of 1.38% compared with an expectation of a 5.49% fall in the same survey three months ago.
The expectation for house prices in two years time is virtually unchanged in the latest survey, with an expectation of a modest 3.19% rise, which is actually slightly down on the 3.23% expected over the next two years in the previous survey.
As for GDP, the survey respondents now see this growing in a year's time by 4.24%, while in the previous survey they saw contraction in 12 months time of 4.87%. This big change around presumably relates to the country coming out of lockdown restrictions much earlier than anticipated.
The survey respondents now see two year out GDP growth as a more moderate 2.77% compared with 3.21% in the previous survey.
The results in the survey most closely watched by the RBNZ - and bearing in mind the central bank has its next Monetary Policy Review next week (August 12) - are those for inflation expectations.
In the previous survey those expectations absolutely tanked, to record lows.
The latest survey has seen a recovery, but even so, the expectation two years out (which is the key one) is for 1.43% inflation, up from 1.24% in the last survey. The latest figure, while an improvement, still puts the expected inflation level well below the RBNZ's explicit 2% target midpoint of the 1%-3% range it aims to have the economy operating within.
The one-year-out expected inflation rate, which plummeted spectacularly to just 0.74% in the previous survey has at least this time risen to within the 1-3% range, at 1.03%.
This latest result will presumably give the RBNZ encouragement that its hugely supportive measures in recent months are breathing some confidence back into the market. But with the inflation expectations for two years out still well below the 2% level, it will probably feel it needs to do more.
There's a widespread expectation the RBNZ will next week again increase the amount of quantitative easing (money printing) it is undertaking.
The unemployment rate in a year's time is now seen as 7.9%, down from 9.41% in the previous survey.