Friday 28th April 2017
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New Zealand business confidence stayed upbeat in April as firms expect to see more activity on their own books and generate bigger profits.
A net 11 percent of companies surveyed in the ANZ Business Outlook expect general business conditions to improve over the coming year, unchanged from March. A net 38 percent see better times ahead for their own business, down from 39 percent a month earlier, but still above the long-run average of 28 percent, and profit expectations rose 3 points to a net 26 percent seeing an increase in earnings.
"Firms are optimistic about their own businesses, and still want to hire and invest," ANZ Bank New Zealand chief economist Cameron Bagrie said in his report. "While headline confidence is 'average', there are a few wrinkles across the broader survey; other indicators remain elevated."
New Zealand's economy has been underpinned by an expanding population, record tourism, a recovery in dairy prices, and robust consumer spending over the past year, giving the government confidence to boost infrastructure spending and target a more aggressive debt reduction target in an election year where tweaking tax settings has been dangled as a potential vote winner.
ANZ's survey of 374 firms shows companies lifted their investment intentions 3 points to a net 24 percent expecting to boost capital spending, while a net 22 percent want to take on more staff in the coming year, unchanged from March.
A composite of the business and consumer confidence surveys indicated the economy will grow at between 3.5 percent and 4 percent, however, Bagrie said the "mellow trend" of today's figures are "consistent with the business cycle becoming more mature" and gross domestic product entering a period of slower expansion.
"While growth is respectable and we expect more of the same going forward if readings from the survey are anything to go by, a common criticism is the lacklustre performance from both productivity and GDP per capita," Bagrie said. "Growth is being delivered by working harder, not necessarily smarter. Migration is becoming the scapegoat."
The survey showed residential building intentions rose to a net 33 percent from a net 25 percent in March and commercial construction intentions were up 12 points to a net 35 percent.
A net 29 percent of firms expect to lift their prices, up from 23 percent in March, although inflation expectations were unchanged at 1.8 percent. A net 30 percent expect it will be tougher to get credit in 12 months, up from 25 percent in March.
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