Brad Olsen: Infometrics Principle Economist on the increased optimism from businesses

Businesses are feeling optimistic they could be in for a better 2025.  

The latest Quarterly Survey of Business Opinion from the Institute of Economic Research reveals a net 9% of firms are expecting general economic conditions to improve.  

This is a jump from a net 4% feeling downbeat three months prior. 

Infometrics’ Brad Olsen told Tim Beveridge that it’s definitely a good sign, however at the same time, around 26% of businesses said they had less business activity in the December quarter. 

He says this could indicate the recession continued through until the end of the year. 

Olsen says there’s quite a clear feeling that while last year was tough, there are better things to come. 

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
It's time to Talk Business with Brad Owsen. Brad, good morning,
Good morning. How's business confidence looking at the moment.

Speaker 3 (00:25):
Well, we've actually seen a bit of an increase coming
through there. The latest survey, according Survey of Business Opinion
from NZII, shows a net nine percent of businesses optimistic
about economic sort of operating conditions going forward. That's the
first time we've seen a positive number from that survey
in nearly four years, and it does come if you

(00:47):
look back last quarter, a net four percent of businesses
was thinking it was going to be worse going forward,
and so that's now flipped around to a net nine
percent positive. That's definitely a good sign and those sort
of more optimistic expectations coming through positive for growth expectations
this year. But at the same time, around twenty six

(01:08):
percent of businesses said that in the December quarter they
had less to do and less business activity and fewer
sales and similar than four So that would indicate potentially
that the recession continued through into the end of the
year through that December quarter, and we won't get those
official numbers for a couple of months, but that feeling
of pretty tough at the end of last year quite clearly,

(01:30):
but also better things to come. Probably one of the
more interesting figures was the fact that at twenty nine
percent of construction businesses were expecting better things coming through.
And we talked yesterday about bigger, higher levels of building
consent starting to show through, so again a little bit
of that, those green shoots starting to emerge.

Speaker 2 (01:49):
Good stuff, grocery supplier costs re accelerate slightly.

Speaker 3 (01:56):
You've still got some concerns around that sort of cost
pressure through the economy. Our grocery supply costs index that
we've just put out late yesterday highlighted that supply costs
increased two point two percent over the year to December.
That's a very slight increase on the two point one
percent the month before and two point zero percent the

(02:16):
month before that, So it's not huge, but it is
just turning around ever so slightly, And I think what
we're seeing coming through in the numbers is just a
few sort of key drivers that have been emerging in December.
Of course, with those higher dairy prices we've been seeing
internationally recently. That's good for our exporters, but to remain competitive,
we've also seen domestic prices increase and so over the

(02:39):
last couple of months, and certainly in December, the likes
of milk, cheese, butter cream, those sort of items have
increased a bit more so unwelcome news, I think for
people thinking about their shopping trips and what those sort
of supply costs might mean for what they're paying on
when they go to the supermarket. But also indicates that
we're not completely and utterly through with inflation yet.

Speaker 2 (03:01):
And apparently a lot more people on floating interest rates.

Speaker 3 (03:06):
Yes, the VATA start that we saw this week for
it was actually for November at the end of last year,
showed around about forty seven percent of new lending, new
mortgage lending that was being fixed for just a floating term,
so well, not fixed at all, rather it was just floating.
That was the highest proportion we've had in quite a while,

(03:27):
probably going back to at least sort of mid twenty twenty,
maybe a little bit earlier now that makes sense. Back
in November, everyone was going, well, if I wait till
the end of November, I'll get the last call from
the Reserve Bank before the end of the year, before
they take a three months break, so I might as
well wait it out a little bit and see the
best straight that I can get. But what was also
interesting was that although you had this big increase in

(03:50):
the floating term, which makes a lot of sense, you
had very few people going for six months and a
lot more coming for one year. And that does seem
to be a lot more people going look, oh and
find something else.

Speaker 2 (04:04):
Yeah, just lost you. But at the end there, Brad,
but good on you. That's Brad Olsen with Business This Morning.

Speaker 1 (04:09):
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