New Zealand Retail Sales Surprise, Business Confidence Hits Year High

New Zealand’s consumer spending proved stronger than expected in the second quarter, with seasonally adjusted retail sales excluding inflation rising 0.5% from the previous three months. Economists had anticipated a 0.3% decline. On an annual basis, sales were up 2.3%, accelerating from 0.7% in the first quarter and signalling resilience in household demand despite higher borrowing costs. Forward-looking business indicators were mixed in August. The ANZ Business Confidence Index climbed to 49.7, its highest reading this year and up from 47.8 in July, suggesting sentiment continues to recover. However, firms’ own-activity expectations—a gauge more closely aligned with GDP growth—slipped to 38.7 from 40.6, indicating caution over near-term output. Taken together, the data present the Reserve Bank of New Zealand with a nuanced picture: solid consumer momentum alongside uneven corporate outlooks. Investors will watch whether the central bank maintains its tightening bias or signals a pause in coming meetings.