The survey showed a net 15 percent of respondents thought economic conditions would get better in coming months, compared to a net 26 percent in the June survey. Photo: RNZ
- Business confidence eases to lowest in 2025, from decade high
- Net 15 percent expect economic improvement vs +26 pct in June survey
- Businesses report soft demand, shedding staff, cutting investment
- Inflation pressures rising, headed above 3 pct
- Survey suggests economy flat or slightly contrasted in Q3, two more RBNZ rate cuts
Business sentiment softened to its lowest level of the year from a decade high in the three months ended September as sales weakened, and they shed staff and cut investment.
The Institute of Economic Research's closely followed quarterly business survey showed a net 15 percent of respondents think economic conditions will get better in coming months, compared to a net 26 percent in the June survey.
Firms reported weaker sales with a net 14 percent saying their trading declined in the past quarter from a 22 percent decline in the previous survey.
Growth was expected to remain subdued in the coming quarter with a net 9 percent forecasting a lift in their own business from 18 percent in the previous quarter.
NZIER principal economist Christina Leung said businesses remained cautious with weak demand remaining the major concern, and firms now facing increasing cost pressures.
"A significant gap remains between firm's experienced demand, which is still weak, and their expectations of improved demand ahead."
Leung said inflation pressures were rising and looked headed to push the annual rate through the top of the Reserve Bank's 1-3 percent target band.
She said there was a turnaround from the previous survey when firms were cutting prices to make sales.
"However, continued excess capacity in the New Zealand economy should drive inflation back towards the RBNZ's inflation target over the coming year."
She said the survey indicated the economy was still soft, and that it posted flat growth or even a further contraction in the third quarter, after the second quarter's 0.9 percent fall.
Leung said she expected two further interest rate cuts by the Reserve Bank to a low of 2.5 percent.
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