NZ: Business confidence ebbed lower in July - ANZ

Cameron Bagrie, Chief Economist at ANZ, notes that the New Zealand’s business confidence ebbed lower in July, but this reflects nothing more than seasonal chill, with seasonally adjusted confidence actually lifting 2 points.

Key Quotes

“Firms remain very upbeat about their own prospects, and are keen to hire and invest.”

“Growth prospects across the economy remain firm.”

“Winter brought the typical nudge lower in ANZ Business Confidence. A net 19% of businesses are optimistic about the year ahead. That’s down 5 points on the month prior and not much more than a dusting of snow-flakes. In seasonally adjusted terms business confidence actually lifted, from +26 to +28.”  

“Firms are well wrapped up.

• A net 40% of businesses expect better times ahead for their own business.  Though down 3 points on June, it’s the second highest reading of 2017, and the third highest in two years. Adjusting for seasonality, firms’ own activity expectations lifted from +43 to +45.
• A net 23% of firms are expecting to lift investment, versus an historical average of 13%.
• Employment intentions rose from +24 to +26, the highest reading since May 2014. That’s tremendously encouraging. At a time firms are reporting finding skilled staff as their biggest challenge, it shows no let-up on the demand side of the equation. 
• Profit expectations eased from +30 to +25 (historical average: 10). So there is little to worry about here.
• Export intentions increased from +27 to +33, the highest since April 2014.  
• Jack Frost nipped residential construction intentions, which dropped from +18 to +11. Commercial construction intentions fell from +29 to +6.   
• Firms’ pricing intentions waned from +31 to +28. Inflation expectations held steady at 2%.  
• A net 27% of businesses expect it to be tougher to get credit. That’s still tough, though an improvement on the prior three months.”