NZ business confidence dips to +52 on oil spike: ANZ survey

For the Reserve Bank of New Zealand, the key message is that inflation expectations held steady despite the oil price jump — a development ANZ called encouraging but cautioned is still early. Meanwhile, wage expectations crept up, and ANZ said spare capacity may be absorbed faster than the central bank assumed in its recent Monetary Policy Statement, posing a mild upside risk to its wage forecasts. The weaker late-month activity readings hint that the oil price rise is beginning to weigh on sentiment, which could soften the case for tighter policy. Traders in the New Zealand dollar and interest rates will watch whether the late-month softness carries into the October survey.

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New Zealand firms remained cautiously optimistic in September, but activity measures deteriorated after oil prices surged, while inflation expectations held at 3.25%.

• ANZ's September survey showed business confidence fell by about 2 points to +52, while expected own activity was unchanged at +48.
• Reported past activity declined 5 points to +11.
• Inflation expectations were steady at 3.25%, cost expectations rose 1 point to a net 82% of firms expecting higher costs, and pricing intentions eased 3 points to a net 48%.
• Responses received after oil prices jumped later in the month recorded weaker activity indicators, with the own activity outlook dropping to +36 from +52 in early responses.
• Manufacturing posted the strongest confidence at +79, while retail and services had the weakest employment and activity measures.
• ANZ's next Business Outlook is due on October 29.

New Zealand business confidence eased in September as a renewed increase in oil prices weighed on responses collected later in the month, according to ANZ's monthly Business Outlook survey. Confidence slipped about 2 points to +52, expected own activity was unchanged at +48, and reported past activity fell 5 points to +11. ANZ said the survey continues to point to a recovery in activity, with many firms reporting stronger activity than a year earlier.

Inflation indicators saw little change. Year-ahead inflation expectations held at 3.25%, cost expectations climbed 1 point to a net 82% of firms anticipating higher costs, and pricing intentions dropped 3 points to a net 48% expecting to raise prices. Firms expect costs to rise by about 2.6% over the next three months, and wage expectations for the next 12 months edged up to around 2.8% from 2.6%.

The timing of responses matters. Most were collected around September 1, but about a quarter came in after a reminder was sent on September 22. ANZ noted that the Dubai spot oil price rose from about $100 a barrel at the start of the month to a peak near $128, then fell back to around $111 when the reminder went out, and stood at about $108 at the time of writing. Late-month responses showed a hit to all activity indicators except investment, with the own activity outlook dropping to +36 from +52 in early responses and past activity turning negative. ANZ said inflation indicators showed little movement and some even eased, which it called encouraging for the RBNZ, though it stressed it is very early.

By sector, manufacturing was the standout, with confidence at +79 and employment intentions at +39, while retail employment intentions were negative at -11 and retail investment intentions were just +2. Construction saw residential activity intentions continuing to improve, and construction pricing intentions reached their highest level in the survey. ANZ's monthly heatmap showed manufacturing and construction heating up, while retail, services and agriculture cooled, though it noted agriculture is easing after a strong couple of years.

On policy, ANZ said wage intentions suggest a mild upside risk to the RBNZ's forecasts, and the share of firms citing skilled labour shortages is consistent with spare capacity being used up faster than assumed in the central bank's Monetary Policy Statement earlier this month.

In its assessment, ANZ said the recovery remains bumpy. It noted the survey suggests a renewed confidence impact from higher oil prices, but late-month activity readings were far from the lows seen in late March and April. How firms respond to the renewed uncertainty will help determine how 2026 ends, it added, cautioning that waiting for certainty risks doing nothing for a long time.