NZ Business Confidence Rises, Inflation Expectations Drop

That timing split showed up in the breakdown. Early responses were much more positive than in June. Later responses, a smaller group, were more in line with the June results. The split indicates the August survey may show less optimism, the economists said, though that depends on how oil prices evolve in the coming weeks.

A net 10% of firms reported activity up on the same time last year, compared with 9% in June. Staff levels were about flat on the year, after declines in May and June. The conflict is acting as a headwind to an economy that was otherwise strengthening, the note said.

Pricing measures softened. Inflation expectations for the year ahead fell to 3.14% from 3.36%, the lowest since March. Firms' own pricing intentions dropped to their lowest since last October. Actual and expected wage growth have stayed broadly unchanged at low levels since the conflict began.

Core inflation is still running on the higher side of the RBNZ's target, the note said. That is not an ideal starting point as the economy regains momentum. The central bank raised the OCR in early July. The bank expects further hikes in the coming months, at a gradual, data-dependent pace.