Business confidence slides to lowest level since September
A net 15.7% of respondents were optimistic about the general economy in May.
Hot Topic
Summer features
New Zealand business confidence slid to its lowest level since the general election last year as optimism about the economy waned and inflation expectations fell to a historic low.
A net 15.7% of respondents were optimistic about the general economy in May, down 15 points from April's reading, and its lowest level since September last year, according to the ANZ Business Outlook. Firms' own activity expectations declined to a two-year low of 33% but above the historic average of 27%.
"Business confidence and firms' signals on the employment, investment and activity front are receding," Cameron Bagrie, chief economist at ANZ Bank New Zealand, wrote in his report. "Inflation expectations fell to a historical low. A low headline inflation rate will be playing a role but it's notable that inflation expectations are tracking below the inflation target midpoint; that's unusual."
Yesterday Fonterra Cooperative Group, the world's largest dairy exporter, cut this season's forecast farm-gate milk price to the lowest level in eight years, while announcing a cautious opening farm-gate milk price forecast for the 2015/2016 season of $5.25 a kilogram of milk solids, at the upper end of commentators' expectations.
Across the sectors, agriculture turned to a pessimistic outlook for the economy, with a net 38.5 percent of respondents feeling negative about the economy.
Mr Bagrie said it was unsurprising the combined strength of the kiwi dollar, which hurts exporters, and a drop in commodity prices, including the country's largest export dairy, weighing on confidence.
Employment intentions across surveyed firms slipped to net 17% from net 22% percent in April. Profit expectations slipped to net 20% from net 26%. Firms planning to invest declined to a net 18% from a net 22%.
Residential investment intentions lifted to a net 39% from 35% but commercial construction intentions slid to a net 24% from a net 45%.
(BusinessDesk)
Suze Metherell
Fri, 29 May 2015
Fri, 29 May 2015
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Business confidence slides to lowest level since September
48183