Thursday 31st October 2013
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New Zealand business confidence slipped from a five-year high in October, while remaining at an elevated level, with firms more bullish about exports and slightly less so on profits and lifting prices.
A net 53 percent of firms expect general business conditions to improve in the year ahead, down from 54.1 percent in September, which was the highest since March 1999, according to the ANZ Business Outlook survey. Firms seeing a pickup in their own business activity in the year ahead rose to a net 47 percent from 45 percent.
Signs are that the economy may be picking up pace. The Reserve Bank today said it estimated the economy grew more than 3 percent in the year to Sept. 30, having projected 3 percent growth in its last statement six weeks ago. The Quarterly Survey of Business Opinion from the New Zealand Institute of Economic Research had business confidence at the highest in three years in the third quarter.
"The New Zealand economy is in a sweet spot," said ANZ New Zealand chief economist Cameron Bagrie. "While we remain at the mercy of global forces to a degree, localised specifics - housing shortages, a city rebuild, booming dairy prices, a turnaround in job prospects encouraging less emigration - are delivering considerable pep."
The construction sector's optimism fell this month, with just 40.7 percent seeing better general business conditions in the year ahead, down from 68.2 percent in September. That relegates construction to the least optimistic of five sectors from the most optimistic last month.
Construction firms' own activity outlook improved to 44.5 percent from 41 percent. The survey shows the drop was driven by commercial construction intentions, which fell to 23.8 percent from 35 percent, while residential remained at about 47 percent.
By contrast, the services sector became more bullish, with 64.5 percent seeing a general improvement in the economy, though their own activity outlook slipped to 52 percent from 53.8 percent.
Agriculture, which had been the laggard in the survey, is now more optimistic than manufacturing or construction, with a net 46.3 percent seeing a general improvement in the economy, though own activity remained weak at 23.8 percent seeing a pickup.
Profit expectations in total fell back to 28.9 percent seeing a pickup, from 33.5 percent in last month's survey. A net 22 percent of firms expect to raise prices in the coming year, down from29.9 percent in September.
Export intentions rose to 26.9 percent from 23.2 percent while investment intentions dimmed to 18.8 percent from 20.4 percent.
Inflation expectations edged up to 2.38 percent from 2.31 percent and hiring intentions were little changed at 18.7 percent.
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