Sharechat Logo

Business confidence firm, particularly in construction sector

NZPA

Wednesday 27th July 2011 2 Comments

Text too small?

National Bank of New Zealand economists are calling for a rise in interest rates after the bank's latest business confidence survey revealed strong confidence and inflationary pressure in the construction sector.

Overall, a net 48 percent of respondents expected general business conditions to improve in 12 months' time in the June survey, which was little changed from a net 47 percent in May.

A net 44 percent of businesses anticipated an increase in activity, up five points on June.

National Bank economists said the "New Zealand story looks good" and was tremendously encouraging at a time of global uncertainty.

The construction sector remained the flagbearer for general business confidence with a net 60 percent of construction firms’ optimistic about the general economy.

Sentiment was strong across all the sub sectors, with business confidence residing well north of their historical averages.

But there was a danger that financial markets would "front-run" the story, resulting in a higher currency and expectations of higher interest rates.

National Bank economists argued that an emergency policy setting for the official cash rate (OCR) was no longer required. The OCR has been cut to 2.5 percent to stimulate the economy.

"The Reserve Bank of New Zealand’s June assumption of subdued construction cost inflation looks wishful thinking," the report said.

A net 50 percent of construction firms expect to lift prices. Overall, a net 29 percent of businesses expect to raise prices," the report said.

"Brace for interest rates to move up. Call it taking the OCR from being extraordinarily low to just exceptionally low."



  General Finance Advertising    

Comments from our readers

On 28 July 2011 at 8:08 am Richard Brown said:
Surprise surprise, a self serving group of bankers want a rate rise. Well guess what, the public don't. based on numbers you lose! These greedy people never learn.
On 28 July 2011 at 8:58 am Jane said:
When the construction sector says that things are going to get better they are really meaning that they hope things wont get any worse. Because it doesn't bear thinking about.
Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Greenfern Industries Limited (NZX: GFI) Releases Interim Results
Hallenstein Glasson Holdings Limited (NZX: HLG) Announcement of Final Dividend
26th November 2021 Morning Report
EROAD Limited (NZX: ERD) Accelerates Towards Next Phase of Growth
Green Cross Health Limited (NZX: GXH) REPORTS STRONG HALF YEAR PROFIT OF $9.7M
Stride Property Ltd & Stride Investment Management Ltd (NZ: SPG) Placement Size Increased Following Strong Demand
General Capital Limited (NZX: GEN) Announces Very Strong Growth
25th November 2021 Morning Report
Gentrack Group Limited (NZ: GTK) Annual Results for the Year Ended 30 September 2021
Pacific Edge Limited (NZX: PEB) Results for Six Months Ended 30 September 2021