NZ business confidence perks up in June as construction, tourism underpin economy

Thursday 30th June 2016

New Zealand businesses grew more optimistic this month as strong construction and tourism sectors continued to support economic activity, ANZ Bank New Zealand says.

A net 20 percent of firms surveyed in the ANZ Business Outlook expect better economic conditions in the coming year, up from a net 11 percent in May, and reaching a six-month high. They were even more upbeat about their own businesses, with a net 35 percent expecting an increase in their own activity, compared to 30 percent a month earlier. Construction and services firms were the most upbeat with a net 37 percent and 36 percent respectively expecting the economy to improve, and a net 59 percent and 39 percent seeing their own activity expanding.

Construction intentions remained high with a net 29 percent expecting residential building to increase and a net 28 percent seeing more commercial work, compared to 36 percent and 29 percent in May. Export intentions crept up to 23 percent in June from 21 percent in May.

"The past month has hardly seen a suite of good news, yet the good still outweighs the negatives," ANZ New Zealand chief economist Cameron Bagrie said in his report. "A firming in business sentiment, firms' own activity expectations and other components of the survey flag accelerating economic momentum."

New Zealand's economy has been supported by a housing boom driving construction activity, primarily in Auckland, where there's a shortage of supply, and as a record number of tourists visit the country. At the same time, record net inflows of migrants have driven up demand for consumer goods and housing, while also filling a growing number of jobs and keeping wages static.

The ANZ survey of 399 firms showed the agricultural sector was still pessimistic about the economy with a net 17 percent expecting it to deteriorate. Livestock investment intentions fell in the month, with a net 18 percent expecting to scale back their investment, compared to 6.9 percent seeing a decline in May.

Across all sectors, firms were more optimistic in their profit expectations with a net 22 percent seeing an increase, up from 20 percent in May. New hiring intentions were flat at a net 18 percent looking to take on new staff.

Pricing intentions dipped with a net 20 percent looking to raise prices in the coming year, down from 22 percent in May, while inflation expectations increased to 1.49 percent from 1.39 percent.

BusinessDesk.co.nz

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