NZ business confidence slips though firms grow more bullish

Thursday 27th September 2012

New Zealand business confidence retreated this month though firms grew more bullish about their own prospects and both pricing intentions and inflation expectations are rising from their lows.

A net 17 percent of respondents in the Business Outlook survey expect business conditions to improve over the next 12 months, down from 20 percent in August. Companies' own activity expectations improved, with a net 29 percent expecting more activity in their business in the year ahead, up from 26 percent last month.

"The New Zealand economy has still come through in reasonably resilient fashion," said National Bank chief economist Cameron Bagrie. "Businesses can take heart. There is nothing like a trip to the US or Europe to lift one's spirits regarding New Zealand."

The latest monthly survey shows export intentions rose to 18 percent from 16.9 percent, employment gained to 8.5 percent from 6 percent and profits rose to 8.1 percent from 5.3 percent.

Construction intentions remained strong, with residential building up at 52 percent from 46.7 percent and commercial construction rising to 34.8 percent from 21.9 percent. Investment intentions weakened to 8.9 percent from 10.8 percent.

Firms planning to raise prices rose to a net 17.4 percent from 16.1 percent and inflation expectations rose to 2.39 percent from 2.34 percent.

Ease of credit has fallen away to 4.6 percent from 12.8 percent.

The strongest growth came from construction. A net 47 percent of firms expect to spend more on residential construction up from a net 28 percent, and a net 21.9 percent may invest more in commercial construction, up from a net 4.3 percent.

"This offers some hope that the construction sector can help fill the void across the economy in late 2012 and early 2013," Bagrie said.

Profit expectations rose to 5 percent from 1 percent, which the bank noted was "still marginal." It described pricing intentions as "tame" with a net 16 percent expecting to raise prices in the year ahead, down from 17.3 percent last month.

Inflation expectations eased to 2.34 percent from 2.55 percent.

BusinessDesk.co.nz

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