Business confidence down - but remains resilient
New Zealand business confidence is down but remains surprisingly resilient, according to a survey out today.
New Zealand business confidence is down but remains surprisingly resilient, according to a survey out today.
However, just how much of this resilience reflects underlying economic substance, rather than the potential feel-good factor associated with the Rugby World Cup, is yet to be seen.
The National Bank Business Outlook survey for September 2011 found that 30% of businesses surveyed expected better times for the economy in the year ahead, down four points on August and 18 points on July.
While 35% of businesses expect an increase in activity for their own business, down 8 points, the historical average was 26%, the survey said.
National Bank of New Zealand chief economist Cameron Bagrie said the survey showed resilience on other levels.
Although profit expectations slipped one point, with 15% of businesses expecting higher profits over the year ahead, employment and investment intentions recorded small increases, which Mr Bagrie said was encouraging.
“Our composite growth indicator, which is based on a weighted combination of activity, profits,
employment and investment, remains robust, he said.
“It is still pointing to 4½% year-on-year GDP growth by early next year.
“Of course these are respondents’ expectations, and will not necessarily translate into reality.
“However, the correlation over time between our composite indicator and GDP growth has been 84%.”
The global economy is facing a decade of hard slog to get its balance sheet in order, the survey said.
The corollary to deleveraging is lower trend growth, it said.
“New Zealand faces the same, to a degree, but we have advantages.
“We have a massive natural endowment in the form of favourable climatic conditions, a huge water resource, natural resources, including oil and coal, a large exclusive economic zone and natural beauty (think tourism) to boot.
“It is imperative that the New Zealand economy unlocks these natural endowments to generate higher incomes.”
Colin Williscroft
Fri, 30 Sep 2011
Fri, 30 Sep 2011
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Business confidence down - but remains resilient
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