Business confidence jumped as firms showed some optimism as Middle East hostilities temporarily improved, before conditions deteriorated again.The ANZ Business outlook survey for July showed headline confidence rose 19 points to a net 56 percent.The closely followed measure of firms' own activity outlook rose 12 points, to 49 percent."The general theme of this month's data is more optimism, with both business confidence and expected own activity at historically solid levels," ANZ chief economist Sharon Zollner said."In terms of past activity, manufacturing is highest (though it dipped), while agriculture saw a marked fall and is back in the pack after years of outperformance."Zollner said construction activity also improved and was "almost back in the black"."The key question for the economic outlook is, how will people respond? Any thought that calm 'normality' will soon make a comeback is likely fading fast. Will businesses decide to just get on with their required investments and hiring?" Zollner said."Will households get on with their normal lives? Or will the uncertainty see many batten down the hatches and go into survival mode? Time will tell; the consequences could be long-lasting."Inflation expectations eased from 3.36 percent to 3.14 percent, but ANZ said they were weaker at 3.07 percent early in the month, and stronger at 3.32 percent late in the month.She noted that between the start of the month and the end of the month, the Reserve Bank hiked the official cash rate, and oil prices rose sharply as the US-Iran war resumed.She said taken as a whole, inflation indicators were slightly lower, and margin pressure reduced."But with oil prices extremely volatile, it's very much a case of wait-and-see."Wage intentions were little changed, but were "a little bit on the high side" compared to the Reserve Bank's wage forecasts, she said.