NZ business confidence rises to 9-month high, led by services, agriculture; home building weakens
By Jonathan Underhill
June 29 (BusinessDesk) - New Zealand business confidence rose to a nine-month high in June, led by services and agriculture, suggesting economic growth is set to accelerate.
A net 24.8 percent of companies surveyed in the ANZ Business Outlook this month expect general business conditions to improve over the coming year, up from 15 percent in May. A net 42.8 percent see better times ahead for their own business, up from 38.3 percent last month and the highest since July 2014. Measures of profit, investment, capacity utilisation and pricing intentions all rose, although inflation expectations at 2.03 percent, were little changed from the previous month's 2 percent.
ANZ Bank New Zealand's composite growth indicator is pointing to 4 percent growth and while that would be"a stretch", the economy "is running faster than current real GDP growth (2.5 percent) would suggest," said chief economist Cameron Bagrie. "Expect 'official' growth to lift."
The New Zealand economy has regained its traditional wings with the recovery in dairy prices adding to the impetus from record migration and tourism and a booming property market. Confidence among farmers rose to a record in the second quarter, based on the latest Rabobank survey, buoyed by improving commodity prices. Today's survey shows confidence among agricultural firms jumped to 26.6 percent in June from 8.3 percent in May, while in the services sector it climbed to 32.6 percent from 21.1 percent.
Bagrie said official measures of economic growth are expected to move towards ANZ's composite indicator, meaning a rate that was "upwind of 3 percent as opposed to downwind of it".
Investment intentions rose to 27.4 percent from 23.5 percent, capacity utilisation climbed to 33.4 percent from 28.2 percent, while pricing intentions edged up to 31.1 percent from 30.2 percent.
Manufacturing sector confidence improved, with a net 17.3 percent seeing better times ahead, from 6.6 percent in the May survey, while construction firm confidence was a net 7.7 percent positive, compared to breakeven in the previous month. Confidence among retailers improved to a net 12.5 percent from, 8.7 percent.
Not all the survey indicators were positive in the latest month. Export intentions dropped to 27 percent from 31.3 percent and hiring intentions only edged up to 24.3 percent from 23.6 percent. Residential construction tumbled to 18.2 percent from 45 percent, which Bagrie said "would be a worry if sustained", while commercial construction fell to 28.5 percent from 36.8 percent.