Business activity measures rose last month, led by the construction and services sectors. Photo: RNZ / Angus Dreaver
Pessimism is easing among the business community but inflation expectations remain stubbornly high.
The ANZ business confidence survey for February shows a net 43 percent of respondents expect the broader economy to deteriorate - up 9 points from January.
The more closely followed firms' view of their own prospects remained negative but less so than the previous month - a net 9.2 percent of firms expected to be worse off.
ANZ chief executive Sharon Zollner said inflation expectations remained at 6 percent.
"Businesses' inflation expectations have been stuck around 6 percent for quite some time, no doubt related to the fact that actual inflation has been stuck around 7 percent for quite some time," she said.
"Firms are anticipating inflation pressures are going to ease but not necessarily by a huge amount."
Overall, there was an improving trend across the business' activity indicators in the survey, Zollner said.
"Whether you're asking them about their activity or their profitability, or employment intentions, even, they're creeping higher.
"They're still low levels, essentially after the Reserve Bank's monetary policy statement in November, we did seem to see a bit of a shocked reaction in December.
"But since then, things have been bouncing back."
Business activity measures rose last month, led by the construction and services sectors.
"Activity expectations are 17 points off their December lows, profit expectations 15 points higher, and employment intentions 13 points higher.
"Opportunity is clearly still knocking.
"That said, the level of most indicators remain subdued - firms are still very wary, and understandably so."
However, there was some encouraging news for the Reserve Bank in the form of wage growth expectations, Zollner said.
"Reported past wage settlements fell from 6.7 percent to 6.0 percent falling in every sector.
"Expectations for wage settlements for the next 12 months fell even more, down from 5.5 percent to 4.7 percent, with no sector higher than 5 percent.
"Wage growth is a key driver of non-tradables inflation, and the RBNZ is unlikely to stop hiking until wage-price spiral risks have convincingly dissipated."
