UPDATE 1-NZ business outlook rebounds in Q2 fuelling rate hike speculation

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WELLINGTON, July 6 (Reuters) – New Zealand’s business confidence improved sharply in the second quarter suggesting a robust economic recovery over the coming year and sparking speculation of a sooner-than-expected rate hike.

A net 7.0% of firms surveyed expected general business conditions to improve compared with a 13% deterioration predicted in the previous quarter, the New Zealand Institute of Economic Research’s (NZIER) quarterly survey of business opinion (QSBO) showed.

On a seasonally adjusted basis, 10% expected business conditions to improve, better than 8.0% pessimism recorded in the previous period. The survey’s measure of capacity utilisation was 94.9% from the previous quarter’s 93.9%.

Firms’ own trading activity measure also picked up strongly, with a net 26% of businesses reporting increased demand in the June quarter, compared with just 2% expecting a rise in the previous quarter.

Labour shortages and supply chain disruptions…

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