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NZ firms balanced between pessimism and optimism

NZ firms balanced between pessimism and optimism on outlook: ANZ

By Rebecca Howard

Sept. 26 (BusinessDesk) - Political uncertainty sparked caution in September with business confidence falling to a net zero reading where there are as many pessimists as optimists and its lowest level in two years.

According to the ANZ Business Outlook survey, the September result is down from a net 18.3 percent of firms that expected general business conditions to improve over the coming year in August. In seasonally adjusted terms, business confidence fell to a net 14 percent from a net 29 percent.

"Businesses are eyeing the pause button," said ANZ Bank New Zealand chief economist Cameron Bagrie. "Some of the paring back may reflect a maturing business expansion, but we're more inclined to put the move down to political uncertainty."

There was no clear winner in Saturday's election and now both the National Party and Labour-Green bloc are vying to form a government with New Zealand First. "Political uncertainty will rise over the coming months as political horse-trading takes place," said Bagrie. He noted that the last thing the New Zealand economy needs is a long drawn-out process mired in political uncertainty. "Business confidence will be key to watch over the coming months."

However, Bagrie also said "when you run the ruler over New Zealand's political system and compare it to others, one house not two and reasonably centralist policy platforms, there's not too much to fret about."

Regarding the activity outlook, a net 29.6 percent of firms anticipate better times ahead for their own business, down from 38.2 percent in August.

The survey shows that investment plans fell to 13.2 percent versus 22.8 percent in August. A net 15.1 percent of firms expect to take on more staff in the coming year, down from 17.1 percent in September.

Profit expectations also fell, with a net 18 percent anticipating bigger profits in the year to come versus 29.3 percent in August while 21.1 percent plan to raise prices, up from 20.5 percent. A net 24.5 percent see exports increasing over the coming year, down from 26.8 percent in the prior month.

(BusinessDesk)

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