NZ: Business outlook provides a solid platform for economy – ANZ

Cameron Bagrie, Chief Economist at ANZ notes that New Zealand’s business confidence was largely unchanged on last month as the headline was down a tad but seasonally adjusted estimates were up.

Key Quotes

“Activity, employment and investment expectations all remain at healthy levels and consistent with good GDP growth.”

“Inflation indicators softened.”

“The votes are in and optimists continue to outnumber pessimists. Firms remain upbeat, according to the ANZ Business Outlook Survey. A net 18% of businesses are optimistic about the year ahead. That’s down a smidgen from last month, but in seasonally adjusted terms business confidence actually lifted, from +27 to +30.”

“Firms are campaigning on good growth for their own business, and are keen to hire and invest.

• A net 38% of businesses expect better times ahead for their own business. This is a key measure that maps well to economic growth. Though down 2 points on August, it’s polling high; the long-run average is 28. Adjusting for seasonality, firms’ own activity expectations lifted from +45 to +46.
• A net 23% of firms are expecting to lift investment, unchanged on July. 
• Employment intentions pulled back from +26 to +17. That’s the lowest reading in over a year, but still a good platform. 
• Profit expectations lifted from +25 to +29. Investment coattails profitability. 
• Export intentions eased from +33 to +27. 
• Residential construction intentions popped from +11 to +36. Commercial construction intentions rose from +6 to +29. 
• Firms’ pricing intentions waned from +28 to +21. Inflation expectations dipped from 2% to 1.9%. 
• A net 23% of businesses expect it to be tougher to get credit. 
• A net 40% of businesses expect still interest rates to rise, though that’s the lowest reading in nine months.”