Earlier:

• Reserve Bank of New Zealand Shadow Board split, most back 25bp rate hike this week
• Preview: Inflation and growth strength point to further RBNZ tightening, BNZ says
• 90% of economists expect RBNZ hike on September 2, poll shows

Data:

Business own activity Outlook 48.2%

• prior 49.3%

Business confidence 53.7%

• prior 56.1%

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The lift in reported past activity, up six points to 16 and led by services, is arguably the more market-relevant signal here than the modest pullback in headline confidence, since it points to actual momentum building rather than just sentiment. That fits with the case for the RBNZ to proceed with its expected 25 basis point hike this week, though the mixed inflation picture cuts both ways: expectations rising to 3.26 percent and more firms planning price increases argue for continued vigilance, while the shrinking size of expected cost increases suggests underlying pipeline pressure may be easing. The jump in the net percentage of firms planning wage increases is the standout risk flagged in the survey, sitting awkwardly against the RBNZ’s own wage forecasts and pointing to a possible skills mismatch that could keep wage-driven inflation stickier than expected. Overall, the survey supports a hawkish-leaning RBNZ narrative without materially shifting the highly-priced-in case for Wednesday’s hike.

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New Zealand firms remain confident and are reporting the bounce-back already underway, even as inflation expectations tick higher.

Summary:

• ANZ’s August Business Outlook survey shows business confidence fell 2 points to 54, and the own activity outlook eased 1 point to 48, with both still at very high levels.
• Reported past activity rose 6 points to 16, driven by the services sector.
• Inflation expectations one year out rose to 3.26% from 3.14%, with more firms expecting to raise costs and their own prices, though the size of expected cost increases is shrinking.
• Export intentions jumped to 31.4 from 26.6, with manufacturing ahead of agriculture, while employment intentions rose to 19.3, the highest since February.
• The net percentage of firms expecting to give wage increases jumped again in August, a trend ANZ flags as a potential red flag against the RBNZ’s own wage forecasts.
• ANZ says the survey points to widespread optimism that the worst is past, describing the lift in past activity as evidence the bounce-back in the economy is already underway.

New Zealand businesses remain broadly confident despite a small pullback in August, according to ANZ’s latest Business Outlook survey, with the standout result being a further lift in reported past activity that ANZ describes as the most encouraging finding of the month. Business confidence eased 2 points to 54 and the own activity outlook slipped 1 point to 48, though both measures remain at very high levels by historical standards. Reported past activity, by contrast, rose 6 points to 16, with the large services sector driving the improvement.

Inflation indicators sent a mixed signal. Inflation expectations one year out rose to 3.26 percent from 3.14 percent, with all sectors recording an increase, and a growing share of firms said they expect both their costs and their own prices to rise. However, the size of those expected cost increases continues to shrink, easing to 2.53 percent from 2.70 percent, suggesting the pipeline pressure feeding into prices may be moderating even as more firms anticipate needing to pass costs on. ANZ noted that oil prices are likely to remain a significant swing factor for these inflation measures given ongoing volatility tied to the conflict in the Middle East.

Elsewhere in the survey, export intentions rose sharply to 31.4 from 26.6, with manufacturing firms more upbeat than agriculture, while employment intentions climbed to 19.3, their highest level since February, led by services. Investment intentions eased slightly to 22.1, remaining strongest in agriculture and weakest in retail, while profit expectations softened to 23.1 from 28.7, with retail the most upbeat sector and agriculture the most downbeat.

One indicator ANZ flagged for closer attention is wage intentions. The net percentage of firms expecting to give wage increases jumped again in August, a result the bank says sits awkwardly against the RBNZ’s own wage forecasts, even as the size of expected wage increases itself remains modest. ANZ said this may point to a growing mismatch between the skills firms are seeking and what they can find in the labour market, a dynamic that could add to inflationary pressure for a given rate of economic growth, and one it plans to watch closely in coming months.

Summing up the results, ANZ said the survey paints a picture of firms keen to get on with things despite a volatile global backdrop, with cost and pricing intentions still elevated but widespread optimism that the worst of the downturn is behind the economy. The bank said it shares that optimism, arguing the lift in past activity suggests the anticipated bounce-back is already underway. The next release of the survey is due September 30.

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Also, out at the same time, Australia Melbourne Institute Inflation August 2026:

0.5% m/m

• prior 1.0%

4.8% y/y

• prior 4.0%

This article was written by Eamonn Sheridan at investinglive.com.