Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


NZ business confidence rockets to 20-year high

NZ business confidence rockets to 20-year high, lifting jobs, profits, investment

Jan. 14 (BusinessDesk) – New Zealand business confidence climbed to a 20-year high in the fourth quarter, lifting expectations for profits, hiring and investments, and raising the prospects for inflation to start to accelerate.

A net 52 percent of businesses were optimistic in the December quarter, seasonally adjusted, the highest since June 1994 and up from 33 percent three months earlier, which was itself the highest in more than three years, according to the New Zealand Institute of Economic Research’s Quarterly Survey of Business Opinion.

Domestic trading activity, which is closely aligned with economic growth, climbed to the strongest since March 2005, with a seasonally adjusted net 15 percent of firms experiencing a pickup in their own activity. Expectations for the coming quarter rose to 32 percent from 24 percent.

“This quarter every region in our survey was doing better,” said Shamubeel Eaqub, principal economist at NZIER. “Until recently much of the recovery was concentrated in Canterbury. This has now broadened to most regions across New Zealand, which points towards a more sustainable and stable recovery.”

The survey comes as economists bet the central bank will raise interest rates in the first quarter, lifting the official cash rate from a record low 2.5 percent to cool inflation pressures in what some economists have called a ‘rock star economy’.

Those that lifted hiring in the latest quarter rose to a net 7 percent from 1 percent, while for the coming quarter hiring intentions slipped to 12 percent from 17 percent. Those reporting ease in finding labour deteriorated to -30 percent from -29 percent for skilled workers and worsened to -10 percent from -5 percent for unskilled workers. Much of the pressure is in Canterbury.

The long-run average is -16 percent for skilled labour and a net 15 percent for unskilled.

The survey was taken before Dec. 15, meaning it hasn’t captured the pickup in retail activity over the peak Christmas-New Year period, though merchants still reported the strongest retail sales since September 2002, with those reporting higher sales jumping to 20 percent from 2 percent while orders placed over seas rose to 18 percent from 5 percent.

Price pressure remained relatively subdued, Eaqub said. Those reporting a rise in average costs slipped to a net 21 percent from 22 percent and expectations for the coming quarter fell to 18 percent from 26 percent. At the same time, those reporting a rise in selling prices rose to 10 percent from 8 percent and for the coming quarter held steady at 24 percent.

“Firms intend to raise prices in coming quarters due to increasing capacity pressures and strengthening economic growth,” Eaqub said. “Capacity constraints are most pronounced in Canterbury, but are starting to emerge in other regions too.”

Capacity utilisation slipped to 90.2 percent from 91 percent three months earlier, while those seeing capacity constraint climbed to 12.7 percent from 10.8 percent.

Those seeing profit growth turned positive, just in the latest quarter, at a net 1 percent from -8 percent in the third quarter. For the coming quarter, a net 16 percent saw profit growth from 12 percent three months earlier.

Investment intentions for buildings rose to a net 7 percent from 3 percent and on plant and machinery those planning to invest more jumped to 18 percent from 8 percent.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Banks: Westpac Keeps Core Government Transactions Contract

The local arm of Westpac Banking Corp has kept its contract with the New Zealand government to provide core transactions, but will have to share peripheral services with its rivals. More>>


Science Investment Plan: Universities Welcome Statement

Universities New Zealand has welcomed the National Statement of Science Investment released by the Government today... this is a critical document as it sets out the Government’s ten-year strategic direction that will guide future investment in New Zealand’s science system. More>>


Scouring: Cavalier Merger Would Extract 'Monopoly Rents' - Godfrey Hirst

A merger of Cavalier Wool Holdings and New Zealand Wool Services International's two wool scouring operations would create a monopoly, says carpet maker Godfrey Hirst. The Commerce Commission on Friday released its second draft determination on the merger, maintaining its view that the public benefits would outweigh the loss of competition. More>>


Scoop Review Of Books: She Means Business

As Foreman says in her conclusion, this is a business book. It opens with a brief biographical section followed by a collection of interesting tips for entrepreneurs... More>>


Hourly Wage Gap Grows: Gender Pay Gap Still Fixed At Fourteen Percent

“The totally unchanged pay gap is a slap in the face for women, families and the economy,” says Coalition spokesperson, Angela McLeod. Even worse, Māori and Pacific women face an outrageous pay gap of 28% and 33% when compared with the pay packets of Pākehā men. More>>


Housing: English On Housing Affordability And The Economy

"Long lead times in the planning process tend to drive prices higher in the upswing of the housing cycle. And those lead times increase the risk that eight years later, when additional supply arrives, the demand shock that spurred the additional supply has reversed. The resulting excess supply could produce a price crash..." More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news