Business confidence in New Zealand increases to 47.8%, but activity dips to 40.6%
by VT Markets
/
Jul 30, 2025
New Zealand’s business confidence rose to 47.8% in July, up from 46.3% previously. However, business activity slipped slightly to 40.6%, down from 40.9%.
Sector performance varied significantly. While agriculture grew, both construction and retail saw declines.
Increase in Business Confidence
July showed a slight rise in business confidence. Yet, the decrease in actual business activity and mixed results across sectors indicate a fragile economic situation. This means opportunities may arise in specific areas rather than a general market increase.
Traders should note the clear differences between sectors. Agriculture is performing well, especially after Fonterra raised its milk payout forecast to NZ$8.50. In contrast, retail and construction are struggling. This situation encourages long positions in agribusiness derivatives and bearish bets on domestic retail companies, particularly following last quarter’s 0.7% drop in retail sales volumes.
Given the sluggish domestic activity, it’s unlikely the Reserve Bank of New Zealand will raise interest rates soon. The RBNZ maintained the Official Cash Rate at 5.50% last week, and with Q2 inflation easing to 3.8%, the New Zealand dollar (NZD) is expected to move sideways or decline. We advise caution when buying the Kiwi dollar, which has had difficulty staying above the 0.6150 level against the US dollar this year.
Market Movement Outlook
Looking ahead, indicators suggest minimal overall market movement in the coming weeks. Implied volatility on the NZX 50 index is at one-year lows. This environment may make strategies such as selling covered calls or cash-secured puts on stable blue-chip stocks appealing. However, be cautious; certain sectors could see sharp movements, making broad market shorts on volatility risky.
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by VT Markets
Jul 30, 2025
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