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Anne Boniface, senior economist at Westpac, notes that the ANZBO measure of business confidence deteriorated further in July for the New Zealand economy and remains at very weak levels.

Key Quotes

“In addition, there was a further fall in firms’ reports of their own activity which are now back to the lowest levels we’ve seen in almost a year.”

“The persistently downbeat attitude of firms has been a feature of the domestic economy this year and today’s survey suggests firms became even more pessimistic in the last month. The fact there was a deterioration in the outlook across almost all components of the survey this month underscores the softness in today’s outturn.”

“We expect downbeat business confidence to increasingly weigh on firms’ investment and hiring decisions. Employment intentions in today’s survey moved into negative territory with a net 6% of firms now expecting to cut jobs. Investment intentions also deteriorated this month.”

“In short there was nothing in today’s release that will dissuade the RBNZ from cutting the OCR next week. Furthermore, today’s survey supports our view that another rate cut will be required come November.”