Michael Gordon: Westpac senior economist on business confidence picking up for the June quarter

New data shows that business confidence has picked up for  in the June quarter, but Middle East tensions and higher fuel prices remain a concern.

The latest NZIER survey shows a net 12 percent of business owners are feeling positive - up from just 1 percent in March.

Westpac senior economist Michael Gordon says things are changing day-to-day, and it's unclear where things will end up.

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Episode Transcript

Speaker 1 (00:00):
So the gender pay gap, at least at the board

(00:01):
level is basically gone. Will get you across that, Jamie
McCay speaking of the Opportunities Party, Jamie McKay and what
the farmers think of them, and Ander Brady is with
us out of the UK right now to seven pass six.
Now we've got some good business confidence numbers for you.
Nzier figures show a modest lift in the June quarter
and net twelve percent of business leaders are feeling positive.
That is up from just one percent in March. Michael

(00:23):
Gordon is a senior economist at wes Packham with us Now, Hey, Michael,
good evening, what do you reckons? Taking it from one
percent in March to twelve percent net positive in the
last month.

Speaker 2 (00:34):
I think this is really a reflection of how the
Middle East situation has been playing out because things are
moving so quickly. Unfortunately, this kind of means there's no
good time to do one of these surveys. We saw
in this one. Earlier responses were a bit more pessimistic
than later ones, which came after the memo of understanding
between US and Iran. But of course Trump says that

(00:54):
he's now back at war again, so maybe it's the
earlier results that are more relevant to where we're heading
from here.

Speaker 1 (01:00):
Well, quite right. I mean, so if we were to
do the survey today, when we're back into a six
potentially a sixty day window of bombing and carrying on,
what do you think it would show?

Speaker 2 (01:09):
Yeah? I think it would show something more negative. I mean,
just as as a rough guide, world oil prices at
their best probably got down to about seventy US dollars
a barrel before their conflict started heating up again. It's
now sort of sitting around eighty four dollars a barrel,
so not in triple digits like it was at the worst.
But of course there's you know, things are changing from
day to day, so we will see where we end

(01:31):
up even a week from now.

Speaker 1 (01:34):
Okay, here's the devil in the detail.

Speaker 2 (01:36):
Though.

Speaker 1 (01:36):
The own activity measures, which tend to have a closer
correspondence with gdproop GDP growth, were little changed for the quarter.
What do you make of that?

Speaker 2 (01:45):
Yeah, I mean I think that's the more relevant measure here.
Just businesses know their own or you know, business owners
know their own business best, rather than trying to opine
about what other people might be thinking. And they're saying that,
you know, things are kind of holding in. It's not great,
but not awful. But I think for from say the
Reserve Bank's point of view, it's not really suggesting to

(02:07):
me that the economy is running any stronger than they
thought when they did their last set of forecasts.

Speaker 1 (02:13):
Yeah, forty firms have raised their prices in the last quarter.
What does that mean for inflation?

Speaker 2 (02:20):
Yeah, well, I think you've got a bear in mind,
it's quite a short time horizon for these questions. It's
really asking about the next three months, and not surprisingly
a bunch of businesses they've all experienced a hit to
their fuel prices. They many of them are hoping that
they can pass that on to their customers. But beyond that,

(02:40):
it's not really telling us a lot about the kind
of inflationary dynamic where price rises get price rises. That's
more a question about your your one year ahead and more,
and that's not really covering in the survey.

Speaker 1 (02:53):
Hey, thank you very much, Michael. As always, it's good
to talk to Michael Gordon, Westpac senior economists.

Speaker 2 (02:58):
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