NZIER QSBO: RBNZ tightening looks to be gaining traction in dampening demand

“New Zealand's business confidence in the first quarter showed some positive developments with both business confidence and firms' own trading activity recovering slightly,” according to the latest New Zealand Institute of Economic Research (NZIER) Quarterly Survey of Business Opinion (QSBO).

The NZIER QSBO statement also said, “The tightening in monetary policy by the Reserve Bank since November 2021 looks to be gaining traction in dampening demand in the economy.”

Additional comments

A net 66% of firms surveyed expected general business conditions to deteriorate compared with 70% pessimism in the previous quarter.

On a seasonally adjusted basis, 61% expected business conditions to worsen, versus 74% pessimism recorded in the previous period.

The survey's measure of capacity utilization rose to 94.0%, from the previous quarter's 93.7%.

There are signs of capacity pressures easing in the New Zealand economy as demand continued to soften in the first quarter of 2023.

Builders were most downbeat in the March quarter. This reflects a continued weakening in demand, with more building sector firms reporting a decline in new orders and output.

NZD/USD grinds higher

The NZIER QSBO outcome failed to inspire NZD/USD bulls, even if they cheer the broad US Dollar weakness around 0.6300 by the press time.

Also read: NZD/USD Price Analysis: Bulls are in control but are flirting with key resistance