NZ: Headline business confidence is treading water - ANZ

New Zealand’s headline business confidence is treading water as a net 20% of businesses are pessimistic about the year ahead, down 1%pt versus February, notes Sharon Zollner, Chief Economist at ANZ.

Key Quotes

“A marked divergence was evident across sectors: retail and agriculture sank significantly, manufacturing and services floated higher, and construction was little changed. In level terms services are most optimistic and agriculture the least. Firms’ views of their own activity (which has the stronger correlation with GDP growth), lifted from +20 to +22.”

“The economy is certainly not crawling, but it’s hardly gliding along. This far into the cycle it is naturally hard to accelerate. But while sectors of the economy such as housing and construction may be tiring, record-high terms of trade and a positive outlook for incomes are providing helpful buoyancy.”

“Activity indicators increased pretty much across the board but remain below the levels of six months ago.

• A net 12% of firms are expecting to lift investment, up 5 points.
• Employment intentions lifted from +5% to +10%, making a comeback.
• Profit expectations increased from -1% to +6%, back in the black.
• Export intentions rose from +16% to +24%, back to pre-election levels.
• Residential construction intentions held steady at +33%. Commercial construction intentions rose from +6% to +10%.
• A net 28% of businesses expect it to be tougher to get credit, deteriorating 4 points.
• Firms’ pricing intentions lifted from +25% to +29%. Inflation expectations were unchanged at 2.1%.”