WELLINGTON, July 5  New Zealand39;s business confidence continued to worsen in the second quarter of this year as companies grappled with increased costs and higher interest rates, a private think tank said on Tuesday.

A net 65 of firms surveyed expected general business conditions to deteriorate compared with 40 pessimism in the previous quarter, the New Zealand Institute of Economic Research39;s NZIER quarterly survey of business opinion QSBO showed.

It added that business confidence is now at its lowest level since the first quarter of 2020 when the COVID19 pandemic was declared.

On a seasonally adjusted basis, 62 expected business conditions to worsen, versus 34 pessimism recorded in the previous period. The survey39;s measure of capacity utilisation fell to 93.4, from the previous quarter39;s 97.1.

The services and building sectors were the most downbeat in the June quarter. The building sector faces acute capacity constraints, and the services sector expects weaker demand as interest rates move higher, NZIER said in its report.

A net 78 reported increased costs in the June quarter, it said. Despite the shakier outlook for the New Zealand economy, inflation pressures have continued to intensify, the report said.

Reporting by Lucy Craymer; Editing by Josie Kao and Lisa Shumaker

Source Reuters