“Dang” was the word of the day as ANZ released its latest business outlook survey, finding that cost expectations rose in every sector from December to January.
The ANZ Business Outlook survey found business confidence somewhat recovered in the new year “as the shock of the November Monetary Policy Statement wore off a bit”.
“Business people appear to have come back from holiday in slightly better spirits.”
Both cost expectations and pricing intentions moved higher in the survey (costs by more, suggesting worsening margin squeeze), while inflation expectations were “stuck” around 6%.
In retail, a net 79% of firms surveyed by ANZ said they intended to increase prices in the next three months while in manufacturing a net 66% were also intending to raise prices.
Looking ahead, firms in retail, manufacturing and construction said they expected costs in three months time would be higher, with the highest cost expectations in agriculture.
“Economy-wide, costs are expected to go up 5.8% over the next three months, but prices by only 3.7%."
ANZ said inflation pressures remained intense and “there’s good reason for the RBNZ to keep hiking [interest rates] a while yet”, and activity measures generally saw a partial bounce-back from the December falls, led by manufacturing, services and retail.
"The survey still implies that the RBNZ is in danger of engineering a harder landing than intended, with downside risk to residential investment, business investment and overall GDP."
But, on the other hand, the survey indicators for consumption, employment and inflation "were consistent with RBNZ forecasts".
It said "the regrettable sturdiness in the direction inflation indicators continue to highlight that the RBNZ has a big job to do bringing inflation back down to 2%".
New Zealand’s biggest bank said wage growth was a must-watch, as a key driver of non-tradable inflation. Wages rose in manufacturing, agriculture and construction, it said, but fell in the retail and services sectors.
Expectations for wage settlements for the next 12 months ticked up to 5.5%, but overall firms anticipated raising wages by less in the next 12 months than they did in the past 12 months.
More firms also expected to raise wages in the near term, with 89.5% of respondents saying they expect to raise wages over the next 12 months.
“That’s slightly higher than the proportion of firms who reported that they raised wages in the past 12 months.”
ANZ said manufacturing (87%), construction (87.1%) and services sectors (87.8%) were the least certain that they’d be raising wages, compared with 97.3% of retailers and 94.4% of agricultural firms.
Employment intentions were negative in all sectors.
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41 Comments
Maybe these business owners just need to join the Williams Corp Academy and have all their problems solved?
https://www.williamscorporation.co.nz/williams-academy/
A mere $25 per week - who says that value is dead?
There'll probably be the opportunity to tap onto their "Life Coaching" seminars next.....
(That's usually the next step - "Look. We've made lots of mistakes in Life and learned from them. Let us pass on to you the benefit of our experience, so you don't make the errors we made" etc)
Went to one of their townhouses in Auckland, 2 bedroom, 3 story, tiny, among about 12 others built in a horse shoe shape. Felt like uni halls or some kind of prison environment. No parking as well, for any of the residence.
Expected to be 650-750k, I was wrong, 980k.
Anyone buying those has oficially given up on life.
Wages rose in manufacturing, agriculture and construction, it said, but fell in the retail and services sectors
The occupations that received the most number of work visa approvals in 2022 were in the hospo, tourism and retail sectors.
The upward pressure on wages in retail and services sectors begins falling away shortly after our border reopens with looser immigration settings - who would've thought?
Interest.co should do a ''survey study'' after 3, 6 & 12 months, rating each survey progressively as time passes with the actual results. I know this might take up to twice as long as the time frames given to fully reveal their findings, but at least over time we will get to understand which survey to believe the most or not. Eventually all survey's will end up with a 3, 6 & 12 month % next to its brand based on the ongoing & updated results.
Better still, perhaps a keen poster might warm to the challenge? Then, over time, done well, it might turn it into a small revenue stream???
Cost to rise, prices to rise. Written in stone now. So inflation to rise for sure and interest rates to rise too.
If some are feeling pain now. Just wait more.
And all those holding and expecting millions + by selling their shacks.. Dare i say anything, I will be trolled.
"the regrettable sturdiness in the direction inflation indicators continue to highlight that the RBNZ has a big job to do bringing inflation back down to 2%".
It's told us how it's going to handle that big job, but just as it has in the past, it has probably underestimated ( or doesn't want to tell us, more like) how much higher than planned the OCR is going to have to go.
Higher costs, more expensive financing and lower prices are all very likely I'd say.
The industry will be in trouble, at least big chunks of it. The question is which parts the Government will bail out - and they will, whether it's Nat/Lab in power. Billions of taxpayer dollars propping the industry is an absolute certainty.
The government of the day can backstop the big fish dominating our banking sector, but writing a few cheques to large players in the construction sector isn't going to cut it.
In 2019, small businesses contributed 37 percent of the construction industry’s operating profit and accounted for around 40 percent of all construction businesses
The number of small construction businesses has also grown, along with activity and profits, to over 26,000 businesses that employed around 90,000 people in 2019. In contrast, there were over 100 construction businesses with more than 100 employees that employed around 40,000 people.
Its not that stupid if they only subsidise demand for new builds. Subsidising new builds brings down the average price as it increases supply, subsidising existing builds brings up the average price as it increases demand.
In fact it wouldn't be a bad idea at all. Lets say the govt give a 2% mortgage for 10 years to FHBs buying a new build house, it should keep demand for new builds going hence more houses being built and the economy keeps on humming, meanwhile the housing supply problem gets fixed. Maybe need to limit it a bit to keep building cost inflation in check. Cheap loans are better then cash subsidies as the buyer can sell at any time and they just lose their cheap loan.
lol.... I mean, mayyybe if mortgage interest makes up part of the cost of a bunch of bananas.... Chicken won't hit $25/kg from mortgage rates hitting 8%. So not really.
Higher mortgages may result in people asking for higher wages = higher prices for goods, but asking for a pay rise =/= getting a pay rise. Higher mortgage interest lowers people's discretionary income and removes demand from the economy. Less demand chasing the same number of goods.
People are going to stop picking up this tab. Anyone with a mortgage, which is something like 40% of us, is already pulling right back. Pensioners, who make up a large chunk of those who do not have a mortgage, are in "conserve money" mode, so that leaves renters and the odd rich fella. Good luck team NZ.
Wages growth 7+ percent last year, but a third of workers got no wage increase. How does that work? Grant Robertson hasn't got the testicles to stand in the next election, but ponficates how much labour has done for the country. Try working on a tin roof for 8 hours in 30+ degrees.
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