New Zealand recorded a recovery in business confidence in the June quarter, with a net 12% of firms forecasting better general economic conditions over the coming months on a seasonally adjusted basis, the New Zealand Institute of Economic Research (NZIER) said in a Tuesday report.
The latest result is an improvement from the net 1% of firms that expected an improvement in the previous quarterly survey that was conducted shortly after the start of the Middle East conflict.
An easing of fuel prices likely supported the improvement in confidence in the June quarter, but geopolitical conditions in the Middle East continue to be highly volatile, with tensions resurfacing and fuel prices rising in recent weeks, according to the report.
Amid this uncertainty, a net 10% of firms reported cutting staff numbers in the June quarter, while a net 1% expect to reduce headcount in the next quarter.
"The renewed conflict between the US and Iran and heightened uncertainty over the upcoming general election in November will likely further weigh on firms' hiring and investment intentions over the coming months," NZIER said.
It added that the June survey points to some continued pessimism in New Zealand's building sector. In contrast, retailers were more optimistic about the outlook and demand in the near-term, while sentiment in the manufacturing sector is neutral.