After over two years of stagnancy, business confidence has shown an upswing, as revealed by an ANZ survey. This boost in confidence, however, might not prevent another rate increase by the Reserve Bank later this year.
The recent ANZ monthly survey indicated a positive shift in the general economic outlook, with a net 2% of respondents expressing optimism for the upcoming year. This marks an improvement from the previous month’s negative 4% reading and is the most significant boost since May 2021. Companies’ hope for their specific trading situations remained unchanged at a net 11%.
However, ANZ’s chief economist, Sharon Zollner, described the survey results as a “mixed bag.” Despite the increased confidence, there are concerns related to declining exports, investment, and employment intentions. On a positive note, inflation expectations witnessed a slight decrease, dropping below 5%.
Zollner highlighted that while there’s improvement, the journey is long, with potential interruptions from factors like exchange rate fluctuations and oil prices. The recovery seen since the beginning of the year seems to be losing momentum, and the persistent high wage and price expectations contribute to the uncertainty.
In terms of inflation, Zollner commented that pressures are reducing, but not rapidly or consistently. The pace of this reduction might not be swift enough to manage core inflation pressures.
Zollner reaffirmed ANZ’s stance on the possibility of more rate hikes, predicting a 25 basis point increase in November.
