New Zealand: Business confidence declines for third consecutive month
October 26, 2011
According to the business confidence indicator published by the National Bank of New Zealand (NBNZ) in October, a net 13.2% of businesses expect better economic times for the coming year. The reading is down 17.1 points over the September survey, when a net 30.3% of respondents expected better economic conditions over the following 12 months. Owing to the monthly drop, the index now hovers above the 0-point threshold, which indicates that optimistic respondents outnumber pessimists. According to the NBNZ, business confidence continues to wane in all five sub-sectors. In particular, businesses' perception of activity levels in the year ahead declined for the fourth consecutive month, which dragged down firms' profit expectations, with only 1.6% of respondents expecting an increase in profits over the next 12 months. According to the NBNZ, the result does not bode well for investment and employment going forward. Moreover, business investment prospects deteriorated notably, with a net 8.7% of businesses expecting better conditions for investing in buildings, plants and machinery over the next year. The reading was down from September's net 11.1% of respondents expecting better conditions.
Author: Ricardo Aceves, Senior Economist