ANZ’s monthly sentiment headline indicator remained steady at a net 50% of firms anticipating improvement in the coming year, while the key measure of businesses’ own activity increased to a net 43%, marking its highest level in five months.
ANZ reported that confidence weakened among respondents who completed the survey late in the month, following the release of weak GDP data in mid-September.
“Forward-looking activity indicators saw a mix of rises and falls this month,” chief economist Sharon Zollner said.
Zollner noted that past activity is the most reliable indicator of GDP performance and showed signs of improvement in the retail sector, whereas construction continued to face considerable challenges.
The survey indicated that firms were anticipating a modest increase in profits, and hiring expectations also rose slightly, driven by a six-fold surge in manufacturing to 35%.
According to Zollner, firms eager for growth are still being held back by low consumer spending and ongoing profitability challenges.
“Overall, the disinflationary issues of competition and low turnover continue to dominate the inflationary problems of high wages and other costs.”
“The good news is that the RBNZ is now seeing things that way as well and is set to backstop the growth outlook with a lower Official Cash Rate (OCR),” Zollner said.
“While there’s uncertainty about the exact path of the OCR over coming weeks and months, the upshot is it will get to wherever it needs to be to ensure that the recovery we are all forecasting happens.”