NBNZ Business Survey - November 2001

Data Flash (New Zealand)

The survey was taken during the first half of this month, i.e. prior to the RBNZ easing on 14 November.

Adjusting for seasonal variations, business confidence has fallen further over the past month from -3% (net respondents) to -13%.

Similarly, firms' expectations regarding their own trading prospects have deteriorated on a seasonally adjusted basis from +25% to +18%. The large gap between general confidence and expected trading prospects reflects the continuing high degree of uncertainty.

The trading prospects series has historically been the more reliable indicator of activity going forward. Its current level remains consistent with growth of around 1.5% over the next 12 months, as assumed by the RBNZ in its latest forecasts.

Expectations regarding export growth, as well as investment and employment intentions, remain consistent with such a modest downturn.

Pricing intentions moderated further to a level consistent with CPI inflation around 2%, confirming the trend of gradually subsiding price pressure projected in the latest RBNZ forecasts.

Overall, this survey confirms the RBNZ's assessment of the economic outlook, which is consistent with our view that the New Zealand easing cycle has come to an end.

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