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

 

NZ businesses more optimistic in September

Tuesday 04 October 2016 10:06 AM

NZ businesses more optimistic in September, shrugging off profit squeeze

By Paul McBeth

Oct. 4 (BusinessDesk) - New Zealand businesses were more optimistic about the state of the economy and their own activity in the September quarter, even as their profits were squeezed by rising costs and an inability to hike prices.

A seasonally adjusted net 26 percent of firms surveyed in the New Zealand Institute of Economic Research's quarterly survey of business opinion expect general business to improve, up from a net 19 percent in June. A net 26 percent experienced stronger trading activity in the past three months and 32 percent see more expansion in the coming quarter, up from 22 percent on both measures in June.

That upbeat outlook was in spite of a net 1 percent experiencing declining profits in the previous quarter as a net 21 percent of respondents faced higher costs and a net 4 percent had to lower prices. Still, firms remain optimistic with a net 20 percent predicting higher profits in the coming period, up from 16 percent in June, even with a net 23 percent expecting increased costs and 7 percent hoping to raise prices.

"Although there was a further lift in confidence in the services sector and firms continue to report high levels of demand, profitability deteriorated over the past quarter," NZIER said in the QSBO report. "This reflected firms' increased difficulty in passing on rising costs, particularly in financial services."

New Zealand's economic activity has been underpinned by a construction sector buoyed by the Canterbury rebuild and Auckland's housing shortage, and record inflows of tourists and net migration supporting consumer demand.

The survey of 925 firms doesn't directly cover agriculture, but showed increased confidence across most regions, with the recent hike to the forecast payout to dairy farmers underpinning gains in rural areas. A net 25 percent of South Island firms predict good times ahead, up from 12 percent in June, while Upper North Island business confidence improved 2 percentage points to 26 percent, and Lower North Island business confidence rose 3 percentage points to 19 percent.

Principal economist Christina Leung said NZIER expects annual economic growth of 3.5 percent in the current year, before moderating to an annual 3 percent pace over the next five years. In the June quarter, Leung had been expecting annual growth of 3 percent this year, slowing to 2.8 percent thereafter.

Construction remained the most upbeat sector with the country's strong pipeline of residential and commercial work, and architects reporting strong growth in demand for their services.

Retail was one of the few sectors to increase profitability, with cost pressures easing and merchants able to raise prices in the period.

That outlook gave firms confidence in taking on new staff, with a net 27 percent of firms expecting to hire in the next quarter, though only a net 4 percent managed to increase headcount in the previous three months. While firms want to take on new staff, they're still finding it hard to find workers, with a net 41 percent saying it was difficult to get skilled labour and a net 14 percent struggling to hire unskilled labour.

"Firms report increased difficulty in finding labour, and this may have limited the extent to which firms could increase headcount over the past quarter," Leung said. "The difficulty in finding labour is particularly acute for skilled labour, with shortages at levels not seen since December 2007."

Leung said the limited ability of firms to raise prices meant inflation would probably stay subdued for the rest of 2016, and a net 37 percent of financial services firms expect lower interest rates in the coming year.

"We do expect an OCR (official cash rate) cut in November and another one some time in the middle of next year," Leung said. "We expect the OCR to trough at 1.5 percent."

Investment intentions were steady, with a net 17 percent looking to buy new plant and machinery, and 9 percent expecting to invest in new buildings.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>

ALSO:

Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>

ALSO:

Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>

ALSO:

Electricity: New Zealand Remains In Top 10 For Energy Balance

The World Energy Council’s Energy Trilemma Index has become part of the energy dialogue both globally and in New Zealand. The Index illustrates the need for countries to balance energy security, energy equity and environmental sustainability. New Zealand ... More>>

ALSO:


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>

ALSO:

Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>

ALSO: