WELLINGTON, Oct 6 (Reuters) – New Zealand’s business confidence rose in the third quarter even as fuel prices increased and geopolitics remained a headwind for the country, a private think tank said on Tuesday.
A net 43% of firms surveyed expected general business conditions to improve compared with 8% optimism in the previous quarter, the New Zealand Institute of Economic Research’s quarterly survey of business opinion showed.
The survey was undertaken from September 9 to 28 and coincided with a surge in fuel prices amid a reescalation of the conflict between the US and Iran.
“These recent developments highlight ongoing volatility and uncertainty in global oil supply and prices, but the impact on sentiment appears muted for now,” NZIER said in a statement.
On a seasonally adjusted basis, 40% expected business conditions to improve versus 14% optimism recorded in the previous period. The survey’s measure of capacity utilization rose to 91.0%, from the previous quarter’s 90.8%.
“There is once again that divergence between what firms experience, which is still fairly weak activity, and what they’re expecting for the next quarter, which generally is one of an improvement ahead,” Christina Leung, principal economist at NZIER, said at a press conference.
NZIER said in a statement that the stabilisation in costs and pricing indicators in the latest survey suggests a modest risk of higher fuel prices flowing through to broader inflation pressures.
Leung said NZIER does not believe there needs to be any further cash rate hikes this year.
New Zealand’s central bank increased the cash rate by 25 basis points in September to 2.75% and signaled more tightening ahead, but stressed any further moves would be measured as it warned of mounting risks to the economic outlook.
(Reporting by Lucy Craymer; Editing by Nia Williams and Cynthia Osterman)
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