NZ business confidence jumps to 10-year high, pointing to economic recovery

Thursday 25th February 2010

New Zealand business confidence rose to the highest level since April 1999, with companies growing more upbeat across manufacturing, agriculture, construction and services, suggesting the economic recovery will gather pace this year.

A net 42% of companies surveyed expect a pick-up in trading over the coming year, up from a net 36.9 percent in December, according to National Bank’s Business Outlook survey.

The report “has provided the first real unequivocally positive piece economic news for 2010,” said Philip Borkin, New Zealand economist at Goldman Sachs JBWere. “Firms remain extremely optimistic for the future and activity gauges within the survey are pointing to a rapid return to above trend growth.”

The confidence report comes as companies anticipate the central bank’s first rate increase since before the financial crisis after the economy crawled out of recession in the second quarter last year. Retailing was the one dim spot in the latest survey, with confidence falling 14 points. Warehouse Group has been among retailers to flag a disappointing festive season and flat start to 2010.

The survey shows a pickup in hiring intentions, profit expectations and prices. Overall business confidence climbed to a net 50.1% from 38.5%, a 10-year high.

Companies also reduced expectations that the jobless rate will grow, while prospects are strongly for higher interest rates.

Businesswire.co.nz

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