NZD/USD fell 20 pips on the NZ business confidence negative result - Westpac

Analysts at Westpac noted that New Zealand business confidence fell to into negative territory (-10.1) in October, following the softer outcome in September (0.0). 

Key Quotes:

"We have not seen results this low since September 2015. Overall, the sentiment in the survey remains consistent with our view that the economy continues to cool.

New Zealand business confidence fell to into negative territory (-10.1) in October, following the softer outcome in September (0.0). When asked about their own activity outlook, firms’ confidence also eased to 22.2. We have not seen results this low since September 2015. The result is most likely a reflection of the inconclusive outcome of the General Election, with responses collected before the new government formed. Overall, the sentiment in the survey remains consistent with our view that the economy continues to cool.

Construction intentions recovered from a temporary low in residential and commercial spaces, which is consistent with the positive outcome in consents data from August. Our view is that construction activity is facing headwinds in the way of tighter credit conditions and access to skilled labour. Indeed, in this survey firms reported ongoing difficulty accessing credit, and pricing intentions within the construction sector continued to rise. Putting this all together, we remain of the view that the issues facing the construction sector will see construction activity rising only slowly over the coming year.

Capacity utilisation continued its decline. Notably, inflation expectations fell a bit by 5 basis points to 1.93% (September: 1.98%), underpinned by softer pricing intentions. Another notable aspect was the increasing difficulty in the access to credit across the wider economy, helping to confirm our sense that credit conditions in New Zealand are tight at present.

This survey supports our slightly softer view on the economic outlook. The own activity results supports a GDP forecast of 2.5-3%, with economic growth for the year likely to ebb on the softer side of the range.

NZD/USD fell by 20 basis points in reaction to the survey."