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


NZ business confidence falls from 20-year high in 2Q

NZ business confidence falls from 20-year high in 2Q as growth moderates

By Tina Morrison

July 8 (BusinessDesk) - New Zealand business confidence declined from a 20-year high in the second quarter as economic growth moderates.

A net 33 percent of businesses were optimistic in the June quarter, seasonally adjusted, from a net 51 percent in the first quarter, according to the New Zealand Institute of Economic Research’s Quarterly Survey of Business Opinion. The New Zealand dollar dipped to 87.38 US cents from 87.49 cents immediately before the release.

The survey showed a net 31 percent of firms expect improved economic conditions in the quarter ahead, down from a net 35 percent in the previous quarter, while a net 15 percent experienced a pick up in activity in the second quarter, down from 24 percent in the first quarter. The survey is consistent with growth moderating from strong levels, with annual gross domestic product moderating to 2.8 percent in the second quarter from 3.8 percent in the first quarter, the NZIER said.

“Things are still pretty good but the momentum is coming off,” said Shamubeel Eaqub, principal economist at the NZIER. “The economy is still growing but the pace of growth may be starting to come off a wee bit.”

Costs pressures are constrained and are likely to remain so for the foreseeable future, Eaqub said. However capacity pressures are starting to come through and prices are beginning to rise with consumer price inflation heading towards 2.5 percent by the end of this year, he said.

Firms reporting a rise in average costs edged up to a net 20 percent from a net 19 percent in the first quarter while a net 23 percent experienced price rises, up from a net 16 percent in the first quarter.

The survey comes as the Reserve Bank is expected to raise the benchmark interest rate this month, following three rises this year. Eaqub said he doesn’t think the bank should raise rates any further.

“We should hold here to see what is happening with the economy,” he said.

A net 93 percent of financial services firms expect interest rates to rise, up from a net 87 percent in the previous survey.

Those firms seeing profit growth eased in the latest quarter, to a negative 4 percent from positive 3 percent in the previous quarter, as sales volumes slowed.

The survey showed capacity pressures building, with capacity utilisation increasing to a net 90.6 percent from 89.4 percent in the previous quarter. The NZIER said the pressures were most acute for builders and those facing the domestic economy, rather than exporters.


© 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