Business confidence falls for first time in seven months
BUSINESSDESK: New Zealand business confidence fell for the first time in seven months amid increased uncertainty about the global economy as Europe's debt crisis spreads, according to the National Bank Business Outlook.
A net 27.1% of surveyed respondents expect better times for the economy in the year ahead, down nine points from April, while a net 34.9% of firms predict their own activity will improve, down two points. That number remains above the historic average of a net 26%.
All sectors except construction showed a decline in sentiment. A net 53.8% of businesses expect a lift in residential construction-related work, up from 50.8% last month. Commercial construction was unchanged on 36%.
Export intentions fell to a three-year low down eight points to 14.9%.
"The fall in export intentions appears to reflect growing concern over the global economy and easing commodity prices," chief economist Cameron Bagrie said in his report. "This is not the stuff of which as export-led recovery is made."
The report came a day after the New Zealand Institute of Economic Research's quarterly forecasts paint a dour picture of the local recovery, with principal economist Shamubeel Eaqub picking just 1.5% growth this year.
The New Zealand dollar's recent six-month low came after the survey was complete, the bank said. The kiwi has traded as high as 84.70 US cents this year, falling to a low of 74.53 cent low last week. It recently traded at 75.28 cents down from 75.35 cents at 8am today.
Pricing intentions were unchanged on 18%, while inflation expectations slipped two basis points to 2.64%.
The Reserve Bank kept the official cash rate unchanged at 2.5% last month, with traders now expecting it will cut 40 basis points from the OCR over the next 12 months, according to the Overnight Index Swap curve.