Business confidence in New Zealand has been on a rollercoaster ride in 2024, reflecting the broader economic uncertainties faced by firms across various sectors. The ANZ Business Outlook report from May 2024 provides a thorough overview of the current thoughts among New Zealand businesses and highlights key factors influencing their outlook.

Overview of Business Confidence

According to the ANZ Business Outlook report, business confidence in May 2024 showed some signs of improvement, albeit from a low base. The headline confidence measure increased by 5 points to -30%, indicating that while a net 30% of businesses expect a deterioration in general business conditions, this is a smaller proportion compared to previous months. This gradual improvement suggests that businesses are starting to see light at the end of the tunnel, though caution remains the prevailing sentiment.

Key Findings from the Report

1. Activity Outlook: The report highlights a positive shift in firms' own activity outlook, which is a crucial indicator of future economic performance. A net 3% of businesses expect their own activity to increase in the next 12 months, up from -2% in April. This shift into positive territory is a significant development, indicating that more businesses are optimistic about their own prospects (ANZ Bank New Zealand).
2. Employment and Investment Intentions: Employment intentions have also improved, with a net 5% of firms planning to hire more staff, compared to 2% in April. Investment intentions, however, remain weak, with only a marginal increase from -7% to -5%. This indicates that while businesses are willing to expand their workforce, they remain cautious about making significant capital investments (ANZ Bank New Zealand).
3. Sectoral Variations: Different sectors exhibit varying levels of confidence. The construction and retail sectors, for instance, have shown relative resilience, buoyed by strong demand. In contrast, the manufacturing sector continues to face challenges due to global supply chain issues and fluctuating demand (FocusEconomics).

Outlook

Looking ahead, the outlook for New Zealand's business environment is cautiously optimistic. The gradual improvements in business confidence and activity outlook suggest that businesses are starting to adapt to the new normal. However, the overall sentiment remains fragile, and sustained improvements will depend on a stable economic environment, both domestically and globally.

Businesses will need to navigate the ongoing challenges posed by cost pressures, supply chain disruptions, and market uncertainties. Close attention to economic indicators and policy developments will be crucial for businesses to make informed decisions and capitalize on emerging opportunities.