NZ business confidence slides in June amid rising rates
NZ business confidence slides in June amid rising interest rates
June 30 (BusinessDesk) - New Zealand business confidence slid this month and rising interest rates have been fingered as the culprit.
The high currency, lower dairy and forestry prices and a levelling in the property market are also being cited as economic downers.
A net 43 percent of respondents in the ANZ Bank Business Outlook survey for June expect general business conditions to improve in the year ahead, down from a net 54 percent in the previous month’s survey. Those expecting a better 12 months out of their own businesses fell to 46 percent from 51 percent, the lowest in nine months but still well above the long-run average.
“It’s important to remember that this decline in confidence has been desired – and at least partly engineered - by the Reserve Bank,” said Cameron Bagrie, chief economist at ANZ Bank New Zealand. “The level of confidence remains very high by historical standards, but is now starting to look a little more realistic.”
A net 24 percent of companies are planning to take on more workers in the next year, well down from the peak of 32 percent in February but above the 10-year average of five percent.
Export intentions at a net 20 percent are their lowest in a year.
Expected profitability has now fallen for four consecutive months, but the falls are getting smaller. A net 29 percent of firms expect higher profits.
A net 52 percent of firms expect an uplift in residential construction and a net 36 percent expect a rise in commercial construction. Both are down on May.
The central bank is likely to be pleased with the inflation indicator in the survey with a net 25 percent of firms expecting to raise prices during the next year, down 3 points from May. Still, in the hot construction sector, a net 54 percent of firms expect prices to rise.
New Zealand’s trade-weighted currency index hit a record high on Friday and the kiwi touched a three-year high against the greenback. The kiwi was recently at 87.63 US cents and the TWI was 81.33.