NZ business confidence gain belies grim corporate outlook

Friday 19th December 2008

New Zealand business confidence picked up this month, though companies such as retailers expect their own activity to slump, with dwindling profits, spending and hiring.

A net 35% of businesses expect worse times ahead - an improvement from the net 43% who were gloomy last month, according to the National Bank Business Confidence survey.

Activity expectations among retailers slumped 21 percentage points to a net 49%, which is a record for the survey. Retailers including Warehouse Group and Briscoe Group are hoping for a pick-up in spending through the peak Christmas period after trimming their earnings outlook earlier in the year.

"Facing the deepest and most-synchronised global recession since 1982, New Zealand is not immune," said Cameron Bagrie, National Bank's chief economist. "The Grinch looks set to steal Christmas."

Clothing chain Hallenstein Glasson today said sales in the period from August 2 to Dec. 14 are 4% down on a year earlier. The retailer's shares fell 0.4% to $2.27.

"We have seen a slight pick up of sales during November as falling fuel prices in particular reach our consumers pockets," chairman Warren Bell told shareholders. "But the intense battle for the consumer's dollar has meant sales have been achieved on a lower gross margin."

The residential construction sector got less gloomy, with a net 21% expecting worse times, down from a net 28% a month earlier. Still, commercial construction slumped to a net 65% from a net 40%.

By Jonathan Underhill

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