Business confidence snaps five-month decline as firms get less gloomy
New Zealand businesses grew less gloomy about the economy's prospects in September, snapping five months of declining confidence,
These results occur in a period when dairy prices rallied from lows, soothing concerns about the strength of the nation's biggest export. A net 19% of firms were pessimistic about the general outlook for the economy over the coming year, an improvement on 29% in August, according to the ANZ Business Outlook survey. A net 17% of firms see their own activity expanding in the coming year, up from 12%, led by construction and manufacturing.
"After five successive months of declines in the headline figure – and substantial declines at that – the turnaround is welcome," ANZ Bank New Zealand economist Philip Borkin said in a note. A rebound "was apparent across the broad survey, and importantly, in key survey indicators that more closely correlate to GDP growth."
The business confidence survey comes after an ANZ-Roy Morgan consumer confidence report showed an improved sentiment among New Zealanders, ending a downward spiral as an increasingly gloomy rural sector, an obvious peak in the Canterbury rebuild and a threatening global slowdown weigh on the collective heads of the nation.
Of the 468 respondents, a net 7.2% expect to increase investment over the coming year, an improvement on the 0.4% predicting scaled back investment, and a net 3.2% anticipating taking on more staff over the next 12 months, largely unchanged from 2.8% in August.
"Hiring and investment intentions are soft, but more consistent with maintaining the status quo than shedding staff or cutting back on spending aggressively," Mr Borkin said.
A net 37% of firms predict unemployment decreasing in the next year, down from 41% in August, while 15% see capacity utilisation increasing from 11% from a month earlier.
Profit expectations also improved, with a net 5.5% expecting increased returns in the coming year, compared to a net 1.5% picking smaller earnings, and a net 23% of respondents intending to raise prices, up from 16% a month earlier. Inflation expectations were relatively stable at 1.69%.
Residential construction intentions improved to a net 29% expecting expansion, from 12% in August, while commercial work intentions grew less negative with 4% experiencing a contraction, down from 9.4% a month earlier.
More firms expect export growth in the coming year at a net 18% , up from 11%, while livestock investment intentions grew less negative, with a net 24% expecting investment to contract, down from 39% in August.