QSBO survey shows confidence about wider economy at lowest since first Covid lockdown; NZIER says survey unlikely to budge RBNZ from fast hiking plans

NZIER has published its Quarterly Survey of Business Survey (QSBO) for the June quarter, showing a slump in confidence about the wider economy to the lowest level since the first Covid lockdown in March 2020 as businesses were crunched between inflationary pressures and a slide in demand for their products and services.

The QSBO's measure of confidence about firms' own situations over the next three months fell by a lesser amount, but also to its lowest level since the effects of the first lockdowns were felt in the June quarter of 2020.

Businesses reported higher cost pressures and a record-high percentage said they were able to increase prices. The last time the price-hiking activity this high was in1985, when inflation was running at 15%.

New Zealand Institute of Economic Research Chief Economist Christina Leung said there was nothing in the survey to "dissuade the Reserve Bank from its aggressive pace of [monetary policy] tightening."

The survey's measure of confidence about the general business situation fell to a seasonally-adjusted minus 62% expecting better times ahead, down from minus 34% in the March quarter. It found a seasonally-adjusted minus 11% expected worse times for their own businesses in the next quarter, vs a positive 5% expecting better times ahead in the March quarter.

NZIER reported the weakest confidence in the retail and construction sectors, with shortages of materials, staff and new orders slamming them up against higher costs. Architects also reported a sharp drop in their pipeline of work in residential construction.