New Zealand: Business confidence decreases in August after having reached a 14-year
August 29, 2013
Confidence among businesses eased in August according to the ANZ Bank Business Outlook, which reported that a net 48.1% of businesses surveyed expect economic conditions to improve in the coming 12 months. The result was below July's 52.8%, which was the highest level recorded in 14 years. Despite the decline, business confidence remains well above the 0-point threshold separating optimism from pessimism. ANZ stated that, "the depths of winter typically get people down, and our seasonally adjusted estimate showed no change." ANZ added that, "there is a huge degree of optimism percolating across the economy."
The monthly reading reflects lower business sentiment in almost all sectors of the economy compared to July. Only construction continues to show sustained levels of optimism, with a net 71.9% of businesses expecting better business times ahead. That said, businesses' expectations for their own activity, which is a better predictor of economic activity, moderated for the second consecutive month in August.
High levels of business confidence bode well for investment going forward. FocusEconomics Consensus Forecasts panellists expect fixed investment to grow 7.8% in 2013, which is up 0.3 percentage points from last month's estimate. For 2014, the panel sees fixed investment accelerating to 8.3%.
Author: Ricardo Aceves, Senior Economist