NZ business confidence continues to decline in March

Friday 31 March 2017 01:27 PM

NZ business confidence continues to decline in March, wariness grows

By Sophie Boot

March 31 (BusinessDesk) - New Zealand business confidence eased in March, continuing February's fall, as sentiment dropped to average levels with declines from retailing, construction and agriculture.

A net 11 percent of firms are optimistic about the general outlook for the economy, down from 16.6 percent in February, according to the ANZ Business Outlook. A net 39 percent see their own activity expanding in the year ahead, up from 37.2 percent a month earlier, and still north of the 28 percent long-run average.

ANZ Bank New Zealand chief economist Cameron Bagrie said the survey continues to point to solid growth, although there had been a cool-down.

"While indicators are positive overall, we can sense some growing wariness," Bagrie said. "Once we adjust for seasonality, business confidence dropped to +4; that’s well down from its high of +37 in September and lower than the historical average of +11. There is no shortage of hurdles for firms to consider."

However, Bagrie said the most important indicators - firms’ own activity expectations, employment and investment intentions - were not showing the same downward drift, and that was "tremendously encouraging".

The survey showed a net 21.4 percent of firms intended to boost their investment in the coming year, down from 22.3 percent last month, while a net 22.7 percent wanted to hire staff compared to 24.2 percent in February.

Business conditions sentiment turned negative in agriculture, with a net 7.9 percent expecting conditions to deteriorate, from a net 2.6 percent positive a month ago. Retail slipped to 9.3 percent positive from 26.1 percent positive in February, and construction fell to 6.9 percent positive from 17.2 percent.

"A broad slowing is natural as we enter a mature and capacity-constricted stage in the economic expansion. We’re not reading too much into it," Bagrie said.

A net 23.4 percent of respondents foresaw increased profitability compared to 23.7 percent in February, while pricing intentions dipped, with 22.8 percent wanting to increase prices this year, from 25.6 percent.

Firms' inflation expectations increased to an annual pace of 1.83 percent from 1.73 percent, and a net 65.2 percent see interest rates rising, compared to 68.6 percent in December.

(BusinessDesk)

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