NZ Business expectations lowest in Pacific Region
01 December, 2000
New Zealand business expectations lowest in Pacific Region
D&B survey finds worldwide business optimism slips for second consecutive quarter
Optimism declining in North America, but still at high levels
Overall results from Dun & Bradstreet’s latest quarterly survey of international business expectations show declining optimism continuing from the third quarter. However, the five aggregate World Indexes measuring global expectations for net sales, net profits, selling prices, inventories and employees are all higher than they were a year ago.
New Zealand’s D&B Sales Expectation Index eased slightly, falling from 20 points in the third quarter to just 19 points in the fourth quarter. The Profit Index eased to the same degree, falling from 5 points to 4 points.
Dun & Bradstreet’s New Zealand General Manager, Adrian Jones said today the latest Business Expectations Survey reflected an ongoing lack of optimism in New Zealand's business community.
He warned that while the extent of the slide in New Zealand's optimism has eased over the last quarter, it was premature to consider this significant.
“Although the New Zealand figures appear to have stabilised, they remain well below the figures posted for the five regions surveyed worldwide. Indeed the results for this quarter show a marked decline on New Zealand's own rating averaged over the 1992 - 2000 period."
"There is no such thing as an over night recovery, and while the Government has begun to address the issue of business confidence, it will take some time for the current initiatives to flow through and take effect."
Almost without exception, each region posted declines for each of the five index categories for the second consecutive quarter. The exceptions were in the Pacific Region, where slight increases in overall sales and profit expectations were driven entirely by extremely positive results from Singapore.
Mr Jones said that the slipping of business expectations in the Pacific region in recent quarters reflected a more realistic attitude to the possible rate of recovery from the economic crisis of two years ago.
“New Zealand and Singapore are the two extremes in the Pacific region. New Zealand business fell in all but one of the five indices, while for the Net Sales Index , Net Profit Index and Employees Index, in the entire region it was only Singapore's executives who recorded an increase in optimism."
The most significant fall in New Zealands rating was for the Employees Index, which has continued to slide from the height of 27 points recorded in the second quarter to 7 points in the third quarter and now -2 points in the fourth quarter.
"Ongoing fears regarding the ability to attract and retain quality employees in the face of 'brain drain' and employer hesitation caused by new legislation in the form of the ERA drives the continued decline in Employee Index.
And while the overall European indexes all declined, several countries in the region posted some individual gains, most notably Germany, which reported rising optimism for the fourth quarter in all five of its indexes.
The World Index for Net Sales expectations fell five points in the fourth quarter, from 53 to 48, two points higher than a year ago. The World Net Profits Index declined three points to 38, four points above where it stood a year ago. The World Selling Prices Index slid two points to 22, nine points higher than the fourth quarter of 1999. The World Inventories Index also slipped two points in fourth-quarter 2000 to 13, but this was up five points from the year-ago period. The World Employees Index dropped four points to 19, one point above its year-ago level.
In the current International Survey of Business Expectations, Dun & Bradstreet provides a distinctive one-to-one comparison of trends in business expectations worldwide. The D&B index figures represent the net percentage of survey respondents expecting higher sales, profits and prices for the global economy. Each index is calculated by subtracting the percentage of respondents expecting decreases from those expecting an increase. Measured economies include North America, Asia/Pacific and Europe. Unless otherwise noted, the increases and decreases in indexes delineated represent changes from the previous quarter. Dun & Bradstreet has been conducting its international quarterly survey of International Business Expectations since 1988.
Mixed Results in Pacific Region
D&B’s Sales and Profits Expectations Indexes for the Pacific region each rose 1 point, the Sales Index to 36, and the Profits Index to 28, while the Prices, Inventories and Employees Indexes each dropped slightly. Overall results would have been much lower except for unusually strong optimism for sales, profits and employment in Singapore. New Zealand continues to retract from extremely high levels reached two and three quarters ago, but Australia, Japan and Malaysia, while generally posting declines, are nowhere near the alarmingly low levels of two years ago.
Asian Region Reports Sharpest Declines
In the Asian Region, the overall Sales Index for the fourth quarter slipped thirteen points to 39 and the Profits Index dropped nine points to 29. Individually, Hong Kong and India posted declines almost without exception. Results for Taiwan were not available for the past two quarters, but fourth-quarter 2000 expectations in Taiwan are down considerably from a year ago. “These three nations are among the most volatile in our survey,” notes Duncan, “often with severe drops and rises from quarter to quarter, so evaluation of trends here is difficult.”
Several European Countries Expect Higher Prices to Make Up for Declining Sales
The European Sales and Profits Indexes slipped six points and three points, to 44 and 26, respectively. Most of the individual countries posted moderate declines in these two indexes as well. The main exception was Germany, where all five indexes rose – Net Sales by four points, Net Profits by eight points, Selling Prices by six points, Inventories by eight points and Employees by two points. Also noteworthy is the fact that while executives in most European nations generally expect lower sales, and to a lesser degree, lower profits, half of the European countries in the D&B survey posted sharp rises in selling price expectations. The Netherlands, France, Italy and Germany reported Selling Price Index rises of 16, 14, 14 and 6 points, respectively.
North American Optimism Slipping but Still Strong
Business optimism in the year 2000 in North America has continued to erode, but remains above the levels of a year ago. All three nations in the region continue to report some of the highest levels of optimism in the global survey, particularly for net sales and net profits. The biggest dips in the region were reported in Mexico, where the Selling Prices Index dropped ten points to 46 and the Employees Index fell six points to 19. However, Mexico also posted one of the highest jumps in the fourth-quarter survey and the highest index level – an eight-point rise in its net Sales Index to 80.
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