The mood in the nation's businesses is improving, according to the latest National Bank business confidence survey.A net 35% of businesses expect prospects for their own firms to improve over the coming year. They are only slightly less optimistic for th
The mood in the nation’s businesses is improving, according to the latest National Bank business confidence survey.
A net 35% of businesses expect prospects for their own firms to improve over the coming year. They are only slightly less optimistic for the overall economy, with a net 30% expecting improvement.
When adjusted for seasonal influences, the lift is nine points with sentiment rising from +23 to +32 (the historical average is +26%).
The big turnaround is in the service sector - expectations for activity, employment and investment are all ahead of the other sectors, and it is second only to manufacturing for profit expectations.
Profit, employment and investment intentions all improved across all sectors.
It is too soon to “pop the champagne”, says the National Bank’s chief economist Cameron Bagrie. The mood was similarly optimistic in the first half of this year, only to tail off rather dismally from July.
“Indicators have merely returned to mid-year levels. “
The result is in keeping with the Reserve Bank holding off any increases in the official cash rate until the second quarter, he said. At preset the official cash rate is at 3% and Reserve Bank governor Alan Bollard is to review that next Thursday.
The present level is regarded as "stimulatory" and would be a problem if inflation were a threat, but Mr Bagrie said that at present there is no such danger.
“There is no inflationary genie set to leap out of the bottle …This should allow the Reserve Bank to stand by and support returning momentum across the economy via supportive monetary policy and continued low interest rates for a while yet.”
