Cost increases remain 'relentless' for New Zealand businesses, employment intentions negative for first time since 2020 - ANZ

Cost increases remain "relentless" for New Zealand businesses with a net 59 percent of surveyed firms expecting to hike their prices in the coming months, ANZ says.

The ANZ Business Outlook survey for November, released on Wednesday, showed inflationary stress was persisting. Profit margins were being squeezed, and "chronically understaffed" firms were "waiting for the hammer to fall as the impact of relentless monetary policy tightening eventually kicks in".

"There are a lot of dark clouds on the horizon and this month's survey reflects that," the report said.

"And inflation expectations jumped back up to a fresh record high, with retailers expecting inflation of 7 percent." 

Milford Asset Management portfolio manager Mark Riggall said the report showed labour shortages continued to be a key issue for businesses.

But business employment intentions were negative for the first time in more than two years, the survey found.

"The question is going forward, as business costs start to rise and revenues may start to be under pressure, do businesses hoard labour and maintain their employment? Or do they start laying off staff?

"There are signs, on the edges, that unemployment could start to rise," Riggall explained to AM host Melissa Chan-Green.

Statistics NZ revealed in October annual price inflation jumped 7.2 percent between the September 2022 and 2021 quarters. That was only slightly down from the three-decade-high annual jump of 7.3 percent in the previous quarter.  

After the Reserve Bank (RBNZ), last week, delivered its biggest-ever official cash rate hike of 75 basis points, ANZ predicted inflation would remain high (6.9 percent) in the December quarter. 

ANZ was also forecasting consecutive 75 basis point interest rate hikes at the RBNZ's first two meetings next year.

During an interview last week, Newshub Nation asked Finance Minister Grant Robertson if New Zealanders could expect some more targeted policies to help them through the cost of living crisis.

Robertson replied by saying the Government "will always look to do that" but didn't provide specifics.

"We know that there are hard times to come, that's why you prepare," Robertson said. "That's why we have been careful to get the balance right between investing and being fiscally responsible."