Business confidence continues to ebb

Monday 30th August 2010

New Zealand business confidence continued to ebb this month, with fewer firms expecting to hire workers, invest more or earn more, according to the National Bank Business Outlook.

Headline confidence remained positive, with a net 16.4% of companies seeing better times in the next 12 months, down from a net 28% in the previous month. Confidence has slipped 34 points from its February peak.

Globally there's concern the wheels are falling off the economic recovery, with data out of the U.S. stoking fears the world's biggest economy could stall or fall back into recession. In New Zealand, economists have wound back their expectations for further interest rate increases amid signs any recovery will be gradual.

"Right now we have an economy that appears to be settling into a moderate expansion phase, albeit with clear risks," said Cameron Bagrie, chief economist at National Bank.

"There's growth alright, but it doesn't feel like it for a lot of folks."

Firms' own activity expectations dimmed, with a net 26% seeing better times ahead for their own business, down from 32% in July. A net 3.1% expect to investment more over the coming 12 month, down from 4.8% last month, while a net 4.3% expect to hire workers, down from 8.3% in July.

Export intentions "bucked the easing trend" with a net 31% of firms expecting to ship more over the next 12 months, up from 28.8% last month.

Pricing intentions were little changed, with a net 31.7% expecting to raise prices, from 31.4% last month. A net 3.6% see profits rising in the coming year, down from a net 9.4% in July.

Residential construction was the weakest spot in August, at a negative 10.5%, down from positive 10% in the previous months. Commercial construction intentions improved to a net 12.2% from a net 6.1%.Inflation was seen at 3.08%, down from 3.17% last month.

Businesswire.co.nz

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