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

 


NZ business confidence drops on higher interest rates

NZ business confidence drops on higher interest rates and falling dairy prices

By Suze Metherell

May,28 (BusinessDesk) - New Zealand business confidence extended its slide from a record high to a third month, in the face of rising interest rates, declining dairy prices and a persistently high kiwi dollar.

A net 53.5 percent of firms are optimistic about general business conditions this month, down from 64.8 percent in April and a 20-year high of 70.8 percent in February, according to the ANZ Business Outlook survey.

"Economic momentum is clearly easing," said Cameron Bagrie, chief economist at ANZ Bank New Zealand. "All up, it's of little surprise to see most survey indicators nudging lower but still well north of 'average', implying we're still in an economic sweet-spot."

Agriculture was the most pessimistic sector, dropping 12 points to 30.6 percent, which may in part be driven by a drop in prices for global dairy products.

Dairy prices fell to a new 15-month low in the latest GlobalDairyTrade auction last week, after spiking up in early 2013. Dairy is New Zealand's largest export, making up 30 percent of goods headed offshore. This morning, Fonterra Cooperative Group, the world's largest dairy exporter, forecast a 17 percent drop in its milk payout for 2014/2015.

The New Zealand dollar softened after the report. It was recently trading at 85.44 US cents from 85.60 cents immediately before the 1pm release.

Construction was the most bullish sector at 63 percent, having slipped from 65.4 percent in the previous month. Services slipped to 61.1 percent from 68.5 percent. Retail plunged to 51.4 percent from 71.1 percent and manufacturing slipped to 40.6 percent from last month's 61.3 percent.

The performance of manufacturing index slipped in April, while government data earlier this month showed retail sales grew at a slower-than-expected pace in the first quarter of this year as the Reserve Bank kicked off a cycle of interest rate hikes to put a lid on inflationary pressures. The Reserve Bank has signalled more interest rate increases are to come although the pace may slow as the kiwi dollar remains high, which is exerting downwards pressure on tradable inflation.

A net 88.7 percent of those polled expect interest rates to rise, up from 86.3 percent last month, while those expecting to raise prices fell to 27.5 percent from 30.2 percent and inflation expectations declined to 2.55 percent from 2.59 percent. Exports slid to 24.7 percent from 34 percent.

Firms' confidence about their own activity outlook eased back to a net 51 percent from 52.2 percent and investment intentions fell to 23.4 percent, from 29.5 percent, while expectations of taking on workers, was flat at 29.8 percent. Those seeing higher profits ahead slipped to 31 percent from 35.7 percent.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Gordon Campbell: On Tiwai Point (And Saying “No” In Greece)

Its hard to see how Rio Tinto’s one month delay in announcing its intentions about the Tiwai Point aluminium smelter is a good sign for (a) the jobs of the workers affected or (b) for the New Zealand taxpayer. More>>

ALSO:

Half Empty: Dairy Product Prices Extend Slide To Six-Year Low

Dairy product prices continued their slide, paced by whole milk power, in the latest GlobalDairyTrade auction, weakening to the lowest level in six years. More>>

ALSO:

Copper Broadband: Regulator Set To Keep Chorus Pricing Largely Unchanged

The Commerce Commission looks likely to settle on a price close to its original decision on what telecommunications network operator Chorus can charge its customers, though it probably won’t backdate any update. More>>

ALSO:

Lower Levy For Safer Cars: ACC Backtracks On Safety Assessments

Dog and Lemon: “The ACC has based the entire levy system on a set of badly flawed data from Monash University. This Monash data is riddled with errors and false assumptions; that’s the real reason for the multiple mistakes in setting ACC levies.” More>>

ALSO:

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news