NZ business survey shows confidence still high but coming year expected to be hard work

Tuesday 9th February 2010

Business confidence has fallen since December, according to a Bank of New Zealand survey, amid signs the nation faces a rocky road out of recession.

The BNZ’s survey of over 20,000 Weekly Overview readers indicates that a net 37% of respondents expect the economy will improve over the coming year. That’s down from December’s reading, which showed a net 43% expected better times this year.

“Sentiment in most surveys soared from the middle of 2009 as a huge sigh of relief was expressed over avoidance of a Great Depression scenario,” said chief economist Tony Alexander. “Now more realism is setting in and we could easily see the recent downward trend in sentiment continue toward the middle of the year in our survey and others.”

Alexander said the survey’s overall impression showed patchy growth in the economy. Businesses appear “very focused on cashflow and their balance sheets,” while being very aware that credit availability is less than before. Businesses are concentrating on getting their accounts under control “before going to their bankers for a new conversation,” he said.

Among key sectors, sheep and beef farmers expect a tough year, while the dairy focus will generally be on debt repayment. There is no clear pattern in construction, while information technology and telecommunications has a mixed outlook with mild signs of improving activity. Manufacturing indicates a mild upturn is occurring, and real estate has weak levels of activity across non-residential, residential and rural sales.

Tourism and travel’s past year has been better than expected, though the general tone remains restrained and cautious in light of economic weakness offshore.

Businesswire.co.nz

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