The New Zealand ANZ Business Survey for June 2025 reveals a surge in business confidence, rising to 46.3 from 36.6. This represents an increase of 9 points, with more firms expecting better business conditions.
The activity outlook measures at 40.9, up from the previous 34.8, influenced by reduced tariffs. Current performance remains weak; past activity, a GDP proxy, fell by 3 points to 2%, with past employment stagnant at -10%.
Price Pressure Concerns
Price pressures persist as 46% of firms plan to raise prices soon, which is an increase of 1 point. Expected costs have climbed by 6 points to 79%, while inflation expectations for the next year hold steady at 2.71%.
What we’re seeing in the latest June print of the ANZ Business Survey is a sharp improvement in forward-looking sentiment, with headline confidence jumping by 9 points to 46.3. That’s not to say conditions on the ground have shifted dramatically—rather, businesses are getting ready for a smoother environment ahead, perhaps underpinned by better trade terms and a softening in some restrictions. That being said, actual activity measures remain subdued, reflecting that these better expectations haven’t yet turned into meaningful output.
The activity outlook reading—often taken as a good proxy for upcoming GDP movement—has moved higher to 40.9. This aligns with anecdotal reports of more open supply chains and potential export improvement. Despite that uptick though, backward-looking indicators tell a different story. The past activity measure drifts down to 2%, showing that the economy’s real-time movements aren’t yet catching up. Likewise, employment remains stuck, with firms showing no intention of expanding staff rosters; past employment is still lodged at -10%.
What does seem to persist is pricing pressure. Almost half of surveyed businesses intend to raise their prices in the short run, and 79% expect their input costs to keep climbing. This ongoing tension between costs and revenue is feeding into a steady inflation outlook—2.71% expected in the year ahead. While the number itself hasn’t moved, the jump in expected costs suggests upward bias may build if current conditions don’t soften, especially with nominal conditions looking stickier than policymakers would prefer.
Monitoring Economic Indicators
Price-setting intentions continue to be the real tell. When we look at the cost side jumping by six points, against stable inflation expectations, it tells us firms are anticipating narrower margins unless they pass those costs along. And looking at historic behaviour in this series, they usually do.
Given this backdrop, watching second-tier indicators like input cost expectations and price-setting plans may offer more insight than raw sentiment or employment intentions. Particularly in rate-sensitive environments, any divergence between input pressure and final pricing will ripple into market reaction.
At this stage, forward-looking measures are painting a much rosier picture than real-time datapoints suggest. If you’re reading closely, the bounce in sentiment may tempt interpretations of a turn. But that turn isn’t visible in operations yet. The gap between what firms expect and what they’re currently seeing is where tensions may emerge.
Business optimism aside, the underlying cost structure remains problematic. We’re likely to see that reflected in margin compression or a delayed pick-up in hiring. Either could affect interest rate expectations, particularly if data in the coming weeks continues to diverge from said sentiment.
As always, it’s not just about headline shifts. Momentum in input cost trends, combined with firms’ resolve to protect pricing power, will matter more for determining where things head next. Actionable signals come from watching how quickly those lagging real economy indicators catch up to expectations—or whether they stall, even as optimism builds.
