NZ: Business confidence has traversed the dip - ANZ

NZ’s headline business confidence has traversed the dip as a net 19% of businesses are pessimistic about the year ahead, versus 38% in December, notes Sharon Zollner, Chief Economist at ANZ.

Key Quotes

“All five sectors improved this month with retail firms the closest to a positive outlook at -4%. Firms’ views of their own activity (which has the stronger correlation with GDP growth), lifted from +16 to +20. It’s hardly a gold medal performance, given the historical average is +28, but it is no longer skating on thin ice.”

“The economy is not breaking records at the moment. A slower housing market, a small dip in net migration, difficulty finding credit and alreadystretched construction and tourism sectors are making acceleration hard work from here. But strong terms of trade and a positive outlook for wage growth are providing a push. We may not have a lot of altitude just yet, but we’re off the end of the ski jump and no longer heading downhill.”

“Activity indicators increased across the board but remain well off their highs.

• A net 7% of firms are expecting to lift investment, up 4 points.
• Employment intentions lifted from +3% to +5%, still subdued.
• Profit expectations inched up from -3% to -1%, still missing the cut-off.
• Export intentions rose from +13% to +16% despite the headwind from the resilient NZD.
• Residential construction intentions jumped from +22% to +33%; (volatile) commercial construction intentions fell from +16% to +6%.
• A net 24% of businesses expect it to be tougher to get credit, unchanged.
• Firms’ pricing intentions eased from +29% to +25%. Inflation expectations fell from 2.3% to 2.1%.”