New Zealand: Business confidence continues to fall in June
June 27, 2018
The ANZ Bank Business Outlook indicator showed that a net 39.0% of surveyed firms were pessimistic about the year ahead in June, a much higher proportion than May’s 27.2%. As a result, the indicator moved further below the net-0% threshold that separates optimism from pessimism among firms. The retail and construction industries took a big hit in June, with confidence plunging the most among the surveyed sectors. Manufacturing also suffered a marked deterioration in sentiment compared to May. Agriculture was the only sector for which confidence improved, albeit slightly.
Similar to the decline in the confidence reading, firms’ positive outlook regarding their own activity—a metric which has a stronger correlation to GDP growth—dropped from plus 13.6 points to 9.4 points, the lowest reading since November 2017. Firms’ employment intentions and profit expectations declined sharply. Moreover, a sizeable number of firms still foresee credit difficulties ahead.
Author: Javier Colato, Economist