Australia Economic Research

New Zealand: business confidence elevated and inflation pressures building

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• Headline reading of business confidence fell in 4Q

• Capacity utilization jumped

• Underlying inflation pressures building

The NZIER Quarterly Survey of Business Opinion (QSBO) released this morning showed a fall in the headline reading from a decade high +36 to a still-elevated +31. The components of the survey were strong, with firms reporting a rise in investment and employment intentions, an intention to raise selling prices as demand improves, and less spare capacity.

The headline reading suggested that a net 31% of firms surveyed last quarter expected the economy to improve in the next six months, confirming our expectation that the New Zealand economy will continue to expand in 2010 (chart).

ENDS