Sharechat Logo

NZ business confidence drops again in June, falling to 7-month low

Wednesday 27th June 2018

Text too small?

New Zealand business confidence plunged to a seven-month low in June with retail most gloomy as costs, credit and capacity weigh on firms.

A net 39 percent of 341 firms surveyed in the ANZ business outlook survey expect general business conditions to deteriorate in the coming 12 months, 12 points lower than May's result and the lowest that measure has been since November 2017.

The survey has become a political football since the election as headline confidence has continued to weaken, with Finance Minister Grant Robertson saying he thinks it's an issue around perception and the survey is not historically correlated with GDP growth. 

Companies are also typically more downbeat about the broader economy under a Labour administration, and ANZ stressed today that business sentiment "is only one input into the decision-making that drives the economy" and "firms’ expectations of their own activity are a better gauge of future GDP growth." That measure was today down but remained positive, with a net 9 percent of firms predicting increased activity in their own business, from net 14 percent last month. Manufacturers were the most optimistic at net 16 percent positive, while retailers were most gloomy at net 6 percent.

"Our composite GDP growth indicator combines business expectations and intentions with consumer confidence. This remains expansionary (with robust consumer confidence providing support), but suggests the economy may continue gently losing steam over coming months, despite the support coming from fiscal stimulus and high commodity prices," ANZ said.

"Going forward, we expect tailwinds in the form of fiscal stimulus and strong terms of trade will see the economy continue to grow at about par. However, cost, credit and capacity headwinds have strengthened, and firms have noticed."

Today's survey shows hiring intentions dropped, with net 1 percent of firms planning to take on new staff from net 7 percent in May, and negative hiring intentions in construction and agriculture. Profit expectations dropped 4 points to net 13 percent negative, with retail the weakest sector. A net 4 percent of firms expect to increase their investment, up 1 point "but still low", ANZ said.

A net 27 percent of firms intend to raise prices, up from 26 percent in May, while inflation expectations rose to 2.3 percent from 2.12 percent.

ANZ said the biggest problem for survey respondents was a lack of skilled employment, with 28 percent considering it their most important issue, and it was a particular issue amongst construction, manufacturing and services firms. Some 17 percent of firms said regulation was their biggest issue, the highest reading for this problem since this data started being collected in March 2012.


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Cashed-up Plexure eyes acquisitions to accelerate growth as loss shrinks
Tower turns to 1H profit, lifts FY guidance
IRD should have doubled claim against Watson's Cullen Group - Professor
Investore FY profit falls 16% on smaller valuation gain, signals flat dividend for 2020
Synlait receives cease and desist letter regarding Pokeno plant
21st May 2019 Morning Report
NZ dollar steady ahead of central bank speeches
Auditors need to come out of the shadows and explain the value they add: FMA
MARKET CLOSE: NZ shares gain as Liberal win in Australia boosts bank stocks
NZ dollar rises against Aussie, Chinese yuan

IRG See IRG research reports