Business confidence ends 2015 at 8 month high as growth prospects remain solid
New Zealand businesses ended 2015 on an upbeat note, with confidence rising to the highest level since April as recent data points to robust growth in the year ahead.
A net 23 percent of firms were optimistic about the general outlook for the economy in 2016, rising from a net 14.6 percent a month earlier, according to the ANZ Business Outlook survey of 432 companies. The agricultural sector showed more optimists than pessimists for the first time since March at 7.5 percent, and they scaled back intentions to reduce livestock investment to a net 11.7 percent from 18.7 percent in November.
On companies' own activity, a net 34.4 percent expect to see growth, up from 32 percent in November, and a net 17.7 percent see bigger profitability in the coming year, compared to 14.9 percent. Firms reduced their export expectations to a net 19.3 percent from 22.8 percent in November.
"The economic bears no longer have the upper paw; there is no denying an improvement in the growth stakes," ANZ Bank New Zealand chief economist Cameron Bagrie said in his report. "New Zealand sits in the right part of the world, sells the right stuff, has an abundance of natural resources, a strong brand, is well-liked globally and has huge free trade access."
The confidence survey comes a day after government figures showed the economy grew 0.9 percent in the September quarter, beating estimates, as an influx of tourists fuelled services sector activity.
Bagrie said one of the biggest issues facing the economy was how New Zealand latches on to its opportunities, rather than the broader macro-economic risks around them.
Today's survey showed investment intentions were largely unmoved at a net 14.9 percent expected to spend more in the coming year, though employment intentions rose to 20.1 percent form 13.5 percent.
Residential construction activity is expected to grow by a net 32 percent of firms, up from 23.1 percent in November, while commercial construction intentions rose to 45.4 percent from 37.5 percent.
Pricing intentions edged up to a net 23.6 percent expecting to raise them in the coming year from a net 22.2 percent in November, though that was boosted by retailers, with a net 41.1 percent intending to hike.
Inflation expectations were unchanged at 1.64 percent, and a net 32.8 percent see interest rates falling in the coming year compared to 23.8 percent a month earlier. A net 13.5 percent expect easier access to credit, from 6.8 percent in November.