Business confidence turns positive for first time since 2002

Tuesday 30th September 2008

New Zealand business confidence rebounded this month as interest rates fell and firms grew more bullish about their own outlook.

A net 1.6% of respondents expect better times ahead, the first time optimists have outnumbered pessimists since May 2002, according to National Bank's Business Outlook survey for September.

Most of the responses were collected before the most recent turmoil in markets, which has seen the failure of Lehman Brothers, the acquisition of Merrill Lynch and government rescues of financial institutions in Europe and the US. New Zealand's economy is forecast to climb out of a three quarter long contraction starting tomorrow, helped by lower interest rates and a weaker currency.

"We are at the mercy of the US economy, the US Treasury, the Federal Reserve, other central banks, Europe, Asia and global credit markets as this game of roulette is played out," said Cameron Bagrie, National Bank's chief economist.

While the confidence number turned marginally positive, the picture is less encouraging when other indicators assessed, according to the report. Employment intentions and profit expectations are still negative.

The gloomiest sector is agriculture, where a net 35% expect worse times ahead.

By Jonathan Underhill

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