The rebound in confidence looks less like an all clear and more like a snapshot taken during a brief window of calm, given the survey ran precisely through the period when fuel prices dipped on the temporary US-Iran shipping agreement, before tensions and prices resurged. What will carry more weight for the RBNZ is the sharp jump in the proportion of firms reporting higher costs, which suggests inflation pressure was building even before the latest reescalation pushed fuel prices back up. That combination, softer capacity utilisation alongside firmer pricing intentions, leaves the central bank with a harder read than the confidence headline alone would suggest, and does little to strengthen the case for near term easing.---Confidence recovered, but the survey window closed just as the calm it was measuring started to break.Summary:NZIER's Q2 Quarterly Survey of Business Opinion showed business confidence at a net 8%, up from net -4% in the March quarterCapacity utilisation eased to 90.8% from 91.2% in the previous quarterA net 12% of firms expect general economic conditions to improve over coming months, up from a net 1% previously, while demand in firms' own business was broadly flat at a net 1%The survey ran from 10 June to 7 July, spanning a period when fuel prices fell under a 60 day US-Iran agreement guaranteeing passage through the Strait of Hormuz, before tensions and prices resurged in more recent weeksA net 10% of firms cut staff numbers in the quarter and a net 3% plan to cut investment in buildings, plant and machinery over the coming year, with the upcoming general election adding to the uncertaintyThe share of firms reporting higher costs rose from a net 37% to over half, while those able to pass on higher costs through pricing rose to a net 41%, pointing to a heightened risk of persistent inflationNew Zealand business confidence rebounded in the June quarter even as the survey period captured only a temporary lull in the pressures still facing the economy. NZIER's Quarterly Survey of Business Opinion showed confidence at a net 8%, up from net -4% in the prior quarter, according to the survey release, with a net 12% of firms expecting an improvement in general economic conditions over the coming months, up sharply from a net 1% previously. Demand in firms' own businesses, however, was broadly flat, with only a net 1% reporting increased activity over the quarter.The timing of the survey, run between 10 June and 7 July, goes a long way to explaining the improvement. That window coincided with a 60 day US-Iran agreement guaranteeing safe passage through the Strait of Hormuz, which briefly eased the fuel price spike tied to the conflict. Geopolitical conditions have since deteriorated again, with tensions between Washington and Tehran re-escalating and fuel prices resurging in recent weeks, meaning the confidence rebound reflects a narrower and more fragile window than the headline number suggests.Caution persisted beneath the improved mood. A net 10% of firms reported cutting staff numbers over the quarter, and a net 3% plan to cut investment in buildings, plant and machinery over the coming year, with the renewed conflict and uncertainty ahead of November's general election both cited as likely to weigh further on hiring and investment intentions. Capacity utilisation also eased, slipping to 90.8% from 91.2% in the previous quarter. Sentiment across sectors stayed mixed, with the building sector still downbeat on soft construction demand while retail and services turned more positive.The more significant signal for policymakers may sit in the survey's cost and pricing indicators. The share of firms reporting higher costs jumped from a net 37% to more than half, while the share able to pass those costs on through higher prices rose to a net 41%. That combination points to a heightened risk that inflation pressure persists even as the acute fuel price shock fades, a dynamic the RBNZ is likely to weigh carefully against the temporary nature of the conditions the survey captured. This article was written by fl6553e4b45d84486a91658a8b3f02bf22 at investinglive.com.