Optimism rebounds sharply ahead of next week's RBNZ decision, but actual activity lags
New Zealand business confidence has staged its sharpest rebound in months, lifting brokers' hopes that improved sentiment will eventually flow through to borrowing demand from both first-home buyers and property investors.
According to ANZ's latest Business Outlook survey, confidence jumped 27 points in June to a net +37, while expected own activity rose 11 points to also sit at +37. ANZ Research noted the swing was already evident before oil prices fell sharply mid-month, suggesting the improvement reflects more than a knee-jerk reaction to cheaper fuel.
Inflation pressures retreating
The encouraging confidence numbers were matched by softer inflation indicators. Inflation expectations eased from 3.63% to 3.36%, cost expectations fell from 90 to 85, and pricing intentions dropped six points to a net 51% of firms planning to raise prices, the lowest reading since November.
Westpac senior economist Satish Ranchhod said the pullback "will help to assuage the RBNZ's concerns about the inflation outlook ahead of next week's interest rate meeting," adding that easing pricing plans give the Reserve Bank less reason to worry about a more persistent lift in inflation.
That relief comes with a caveat, however: both banks note underlying price pressures haven't fully unwound. ANZ pointed out that inflation indicators "still suggest higher inflation ahead," while Westpac observed that all of the survey's inflation measures "remain higher than the levels we saw prior to the Middle East conflict."
What it means for the rate outlook and borrowing capacity
ANZ expects a 25-basis-point hike at next week's official cash rate review, while Westpac instead expects the Reserve Bank to hold steady, with any tightening pushed out to gradual 25bp moves in September and December. Either way, both banks agree the RBNZ will tread carefully as it weighs the economy's capacity to bounce back against the lingering effects of the oil price shock.
That cautious stance is reinforced by easing credit conditions, which give the Reserve Bank more room to move gradually rather than react sharply.
Ease-of-credit expectations improved markedly in June, moving to -1.9 from -17.1, suggesting concerns about credit access are easing. Investment intentions climbed to 16.5 from 5.8, with a sharp lift across most sectors bar manufacturing, while residential construction intentions rebounded to 25.0 from 11.8 and commercial construction hit its strongest level since March at 28.9. Large firms continue to outperform smaller ones, with ANZ data showing higher reported past activity and lower non-performing loan rates among bigger businesses.
With confidence rebuilding and credit conditions loosening, advisers may find renewed appetite for investment and construction lending in the months ahead — though much will depend on whether the RBNZ delivers a hike or a hold next week.
Read the full reports: ANZ NZ Business Outlook, June 2026 and Westpac's First Impressions: NZ business confidence, June 2026.
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