Weekly market wrap up - 4 July 2025
The latest NZIER Quarterly Survey of Business Opinion delivered a cautiously optimistic read on Kiwi business sentiment, with a net 27% of firms expecting better economic conditions ahead. While the headline might look celebratory, the underlying activity remains subdued. Domestic trading activity stayed weak across sectors, and firms continue to report margin pressures and difficulty passing on costs. In true “smile through the pain” fashion, manufacturers, retailers and service providers are holding out hope for a recovery - despite still facing tepid demand.
Confidence may be perking up, but the fundamentals of spending and sales haven’t yet followed suit, suggesting a recovery that (so far) is more spirit than substance.
Non-farm Payrolls data this week showed the US economy adding 147,000 jobs in June, extending a steady run that’s defined the labour market for much of the past year. It wasn’t a blockbuster print, but it beat expectations and suggests that while the pace of hiring has cooled from its post-pandemic highs, employers aren’t slamming on the brakes. Looking more broadly, the unemployment rate edged down to 4.1%, pointing to ongoing demand for workers even as businesses grow more selective. It’s a picture of calm in an otherwise noisy economic landscape, with trade uncertainty and political headwinds still hovering offstage. For now, job growth continues to defy gravity, even if a gentle descent feels more likely than another liftoff.
June’s payrolls weren’t flashy, but they were firm, reminding the market that resilience doesn’t always come with fireworks.
In a rare moment of central bank satisfaction, Eurozone inflation landed bang on the European Central Bank’s 2% target in June, nudging up from 1.9% in May. While that might sound like a win, it comes with a few caveats. Price pressures in services stayed sticky, and core inflation, which excludes food and energy, remained higher than the headline figure - likely keeping policymakers on their toes. Markets are still betting on more rate cuts later this year, but the ECB isn’t likely to be rushed. All this played out against the backdrop of NATO’s 75th summit, where leaders focused more on defence budgets than balance sheets.
With fiscal spending set to rise and inflation not quite out of the woods, Europe’s economic path remains a careful tightrope walk.
Kiwis received a bittersweet blow this week - Jaffas, the bright orange chocolate balls once famous for rolling down Dunedin’s Baldwin Street, are now rolling off supermarket shelves for good. The manufacturer of the iconic lolly, RJ’s, has pulled the plug, citing low sales as the reason for bringing an end to one of New Zealand’s most nostalgic treats. The decision has sparked a wave of online grief, with some fearing it could mark the start of a broader confectionery cull. It’s a cultural footnote more than an economic one, but still a reminder that even the most iconic products aren’t immune to shifting tastes and tighter budgets.
As inflation lingers and buying habits evolve, Jaffas’ exit is a hard-shelled reminder that sentimentality alone can’t compete with the cold calculus of consumer demand.
Authors: Zoe McCane and Ganan Jeyakumar
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