Business confidence dips but still points to solid growth

Business confidence dips but still points to solid economic growth – ANZ

By Rebecca Howard

Aug. 31 (BusinessDesk) - New Zealand business confidence dipped in August but optimists continue to outnumber pessimists and activity and investment intentions remain consistent with solid economic growth.

A net 18.3 percent of firms surveyed in the ANZ Business Outlook expect general business conditions to improve over the coming year, down from 19.4 percent in August. In seasonally adjusted terms, business confidence rose 3 points to a net 30 percent. Regarding the activity outlook, a net 38.2 percent of firms anticipate better time ahead for their own business, down from 40.3 percent in July. While it is down slightly on the month it is "still polling high," said ANZ Bank chief economist Cameron Bagrie. The long run average is 28 percent.

The survey shows that investment plans were virtually unchanged at a net 22.8 percent versus 23.0 percent in July. However, a net 17.1 percent of firms expect to take on more staff in the coming year down from a net 25.7 percent in July, something Bagrie said may be linked to difficulty finding suitable candidates for jobs.

"We're seeing healthy readings for confidence, activity expectation, investment and employment across all sectors and regions," said Bagrie. "That's a broad-based economic expansion in operation." He said ANZ's confidence composite indicator points to annual GDP growth in excess of 4 percent. However, difficulty in finding skill labour and subpar productivity growth "puts that out of reach in practice." Real GDP growth of around 3 percent is far more feasible, said Bagrie.

A net 29.3 percent anticipate bigger profits in the year to come up from 24.9 percent in July while 20.5 percent plan to raise prices, down from 27.6 percent. A net 26.8 percent see exports increasing over the coming year, down from 32.7 percent in the prior month, the survey showed.

(BusinessDesk)

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