ANZ's latest survey signals brighter economic prospects for New Zealand's economy

New Zealand’s economy is showing signs of gradual recovery, according to the November ANZ Business Outlook survey.
Business confidence eased slightly by one point to +65, but expected own activity increased by two points to +48, reflecting optimism among firms.
ANZ Chief Economist Sharon Zollner (pictured above) noted that while New Zealand’s economy remains sluggish, there are encouraging signs.
“The economy is clearly still very weak, but things are starting to turn higher,” Zollner said.
Inflation expectations decline
One of the most positive outcomes of the survey is the decline in inflation expectations, which dropped from 2.8% to 2.5%. Firms’ pricing intentions also fell slightly, with 42% planning to raise prices in the next three months, down from 44%.
“Inflation expectations are getting steadily closer to the magic 2% mark,” Zollner said.
Business inflation expectations are falling faster than consumer expectations, which remain near 4%. This shift could stabilise price-setting behaviours and align them with the Reserve Bank’s (RBNZ) inflation targets.
Employment and wages show gradual recovery
Employment metrics are beginning to improve, with past employment rising from -15 to -12 and reported wage increases easing to 2.7% from 3.0%. Wage expectations for the next year remain stable at 2.6%, consistent with inflation targets.
“The reported ease of credit is at near-record highs,” Zollner said, suggesting that credit availability is unlikely to constrain economic recovery efforts.
ANZ’s take on economic momentum
Zollner stressed that the recent improvement in activity expectations indicates that interest rate cuts are having an effect.
“The improvement in experienced activity suggests that interest rate cuts are changing actual behavior, not just expectations,” she said.
While challenges such as unemployment and business failures persist, the survey reveals a better outlook for the future.
“Firms are saying that things are looking brighter,” Zollner said.
With easing inflation and improving business confidence, RBNZ is unlikely to consider large emergency cuts, further signaling a turning point for New Zealand’s economy.
Read the ANZ New Zealand Business Outlook in full.
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