Photo: Unsplash/ Declan Sun
- Business confidence climbs in July: ANZ survey.
- Firms' own activity and investment intentions hold steady.
- Residential construction slumps.
- ANZ says more monetary easing should be on the way.
Business confidence has risen for the second month in a row, but the recovery is uneven, with residential construction slumping to its worst result this year.
ANZ's monthly sentiment headline measure rose by two points to a net 48 percent of firms expecting an improvement in the year ahead, while the more closely followed measure of businesses' own outlooks was almost unchanged at 40.6 percent.
Chief economist Sharon Zollner said the survey still pointed to a very uneven economic recovery.
"We're still seeing a bounce back from the sharp fall in April, caused, it appears, by Trump's tariff announcements. It's been an incomplete bounce back, but generally we're seeing the forward-looking indicators trend higher."
Zollner said the best news in the survey was that firms' inflation expectations had eased, with fewer expecting higher costs or expecting to raise prices.
"It supports our view that the Reserve Bank's inflation concerns will ease quite rapidly from here."
The survey showed firms expecting slightly better profits, but hiring expectations were still sliding, with retail, in particular, shedding jobs at a faster rate.
Zollner said residential construction was weaker, and the sector appears to have thrown in the towel in their hope for a recovery in 2025.
She said the survey highlights the asymmetric nature of the recovery, and more Reserve Bank rate cuts than forecast are on the way.
"This will pave the way for more easing and enable them to backstop the recovery, which is a bit stop-start."
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