Business confidence rises – but 'stuck in second gear'
BUSINESSDESK: New Zealand business confidence edged higher in July, led by employment and investment intentions as concerns over European's debt crisis eased.
A net 15.1% of surveyed respondents expect better times for the economy in the year ahead, up two points from June, according to the latest National Bank Business Outlook survey.
A net 24% of firms predict their own activity will improve, up four points. That number remains just below the historic average of a net 26%.
"The economy seems to be stuck in second gear," Cameron Bagrie, chief economist said in his report. "The nation's economic compass is polarised.
"Frictions from the north in the form of European malaise need to be warily respected," he said. In the east "we have New Zealand's unfolding connectivity with Asia – a once-in-a-generation opportunity".
A net 10.7% of businesses expect to be hiring more staff, up from 3.4% in June. Investment intentions rose four points to 12.8%.
Profit expectations are being pared back to 1% from 4.9%. Export intentions fell to a three-year low, down nine points to 9.1%.
The construction sector showed the greatest deterioration in confidence with a net 4.3 percent of firms expecting a lift in construction work, down from 17.4 percent last month. Residential construction eased back 1 point to 28 percent.
The bank's combined composite growth indicator from the business outlook survey and consumer confidence survey is flagging 2.2 percent economic growth by the end of next year.
"This is not much to crow about, though relative to some trading peers it's positively stellar," Bagrie said.