WELLINGTON (Reuters), – New Zealand businesses saw a decline in confidence and increased demand during the fourth quarter last year, as the COVID-19 virus outbreak continued to wreak havoc. A private think tank reported Tuesday.

According to the quarterly survey of business opinions (QSBO), 28.0% of the firms polled expected that general business conditions would worsen, compared to 11% pessimism from the preceding quarter.

Seasonally adjusted, the survey showed that 34.0% of respondents expected worsening business conditions, as opposed to 11.0% in the prior period. According to the survey, capacity utilisation fell from 96.1% to 89.5% in quarter 1.

According to NZIER’s report, acute labour shortages caused by pandemic restriction are contributing to a boost in wage growth.

It said that 61% of respondents reported higher costs for the December quarter. This is the highest number since June 2008.

The report stated that inflation pressures have been increasing rapidly, and suggested that the central banking should continue to tighten its monetary policies.

New Zealand’s central banking raised interest rates again in November, for the second month straight. It did this to maintain control over consumer price increases and to warn against further hikes.