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NBNZ confidence results mirror 1987 market crash period

Thursday 27th November 2008

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New Zealand business confidence this month fell to levels not seen since the period immediately after the share-market crash of 1987, according to National Bank's Business Confidence survey.

The headline number in the NBNZ Business Confidence Index is roughly the same as last month - with a net 43% of respondents expecting business conditions to deteriorate over the coming year. Still, when asked about their own business's prospects, the negative sentiment comes close to setting new historical lows.

A net 14% of those surveyed expect worse times over the year ahead. This is the lowest level of personal expectation recorded by the survey since April 1988 and the period immediately following the 1987 share market crash.

The employment intentions figures also raise a red flag. A net 21% of businesses expect to employ fewer staff over the year ahead, matching last month's record low and continuing a 10 month run of falling employment expectations.

And negative profit expectations are also breaking records with a net 39 percent expecting lower earnings over the year ahead.

The only bright note in the survey is the export expectations figure at +6% - however even this is down sharply on the previous month's +10%.

In its press release on the survey result National Bank's Chief Economist Cameron Bagrie concludes, "It is abundantly clear that the coming 12 months will be the most challenging this economy has faced in more than two decades."

By Jonathan Underhill

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