NZ business confidence falls in March as South Islanders feel gloomier

Thursday 31st March 2016

New Zealand businesses were increasingly negative about the overall state of play in March, although were more optimistic about their individual prospects.

A net 3 percent of firms were optimistic about the general outlook for the economy in 2016, down from a net 7 percent a month earlier, according to the ANZ Business Outlook survey of 444 companies. The agricultural sector was the most pessimistic, with a net 45.8 percent expecting business conditions to deteriorate over the coming year.

Companies were more positive about their own business activity, with a net 29 percent expecting to see growth, up from 26 percent in February, and a net 13 percent see bigger profitability in the coming year, compared to 12 percent. Firms reduced their export expectations to a net 21 percent from 23 percent in February.

“Business confidence remains in the dog house - however, firms are more optimistic about the outlook for their own business and this is a far more important signal for economic direction," ANZ Bank New Zealand chief economist Cameron Bagrie said in his report. "Firms’ own activity expectations, in conjunction with expectations for employment, investment and profits, are a key litmus test for whether firms are getting on with it; they appear to be. Solid growth still beckons."

Bagrie said a "clear North-South Island divide" was opening up, with the North Island far more optimistic while the South Island "looks like it has been collared more by dairy unease."

"However, sentiment across the two islands often moves in opposite directions across indicators, so we can’t draw universal conclusions," Bagrie said.

The survey showed investment intentions fell to a net 11 percent expecting to spend more in the coming year, from a net 14 percent in February, though employment intentions rose to 12 percent from 16 percent. A net 1.7 percent expect easier access to credit, from 10.6 percent in February.

Residential construction activity is expected to grow by a net 36 percent of firms, up from 14 percent in February, while commercial construction intentions rose to 30 percent from 24 percent.

Pricing intentions edged down to a net 17.7 percent expecting to raise them in the coming year from a net 17.8 percent in February. Inflation expectations dipped to 1.38 percent from 1.39 percent, and a net 38.6 percent see interest rates falling in the coming year compared to 37.3 percent a month earlier.

(BusinessDesk)

BusinessDesk.co.nz

Comments from our readers

No comments yet