Business confidence still in doldrums

By Phil Boeyen, ShareChat Business News Editor

Tuesday 27th November 2001

Business confidence remains negative but stable, according to the latest National Bank Business Outlook survey.

Last month the survey recorded its third largest drop ever in the wake of the September 11 attacks and there has been no improvement this month.

"In November, general business confidence remains in negative territory with a net 18% of respondents expecting general business conditions to deteriorate over the coming year," says National Bank chief economist, John McDermott.

"Business sentiment remains subject to great uncertainty and has settled at last month's level. It is difficult to judge whether the deterioration in confidence that has occurred globally following the terrorist attack of 11 September will be relatively short-lived or more protracted."

Mr McDermott says the general pessimistic tone of the survey results seem to be at odds with an abundance of anecdotal evidence suggesting things are going well at the moment.

"Business leaders have formed realistic expectations that the synchronised global slowdown will eventually impact on the New Zealand."

The November survey found that those in the agricultural sector have the strongest view that general business conditions will deteriorate over the coming year, reflecting that the combination of high commodity prices, low currency, low interest rates and good growing conditions is unlikely to last forever.

Respondents said that while low interest rates are spurring investment intentions and the construction sector is predicting a housing turnaround, exporters believe volumes will begin slipping.

The least pessimistic sector was the retail industry, with a net 10% of respondents expecting general business conditions to deteriorate over the coming year.

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