The business mood continues to bounce along like a March hare overdoing the espresso.The latest National Bank business confidence survey, released this afternoon, shows a net 50% of firms expect an improvement in the economy over the coming three months.T
The business mood continues to bounce along like a March hare overdoing the espresso.
The latest National Bank business confidence survey, released this afternoon, shows a net 50% of firms expect an improvement in the economy over the coming three months.
The key “own firm” expectations are almost as high – 43%.
Both are the highest they have been since May 1999 – which was around the same period of the economic upswing which took place after the Asian crisis downturn of 1998.
Even the agriculture sector is positive, National Bank senior economist Khoon Goh said, despite the drought in the northern half of the North Island and parts of the east coast of the South Island.
The results raise the potential of a growth upswing of 4-5% over the coming year, he said.
That is well above most current forecasts of around 3% or possibly a little above that.
There are a couple of cautions. One is that, at this stage, investment intentions are lagging the pickup in firms’ own activity expectations.
“But there is no doubting the improving trend. We take particular heart from the rising trajectory for profits.”
The other caution is inflation. Expectations on prices rose marginally in the survey and pricing intentions also rose.
There will be some headline increases already hitting inflation over coming months, with rises in accident compensation levies and the emissions trading scheme possibly raising electricity prices by as much as 5% from July.
The Reserve Bank tomorrow morning reviews the official cash rate and although it is not expected to raise it from its present level of 2.5%, it is expected to give a clearer steer on when it will begin lifting the rate from its current stimulatory level.
The National Bank survey results are firmly in the “go earlier rather than latter” category.
