New Zealand: Business confidence deteriorates further in May
The ANZ Bank Business Outlook indicator showed that a net 27.2% of surveyed firms were pessimistic about the year ahead in May, down from April’s 23.4%. As a result, the indicator moved further below the net-0% threshold that separates optimism from pessimism among firms. The retail industry took a big hit in May, with confidence plunging to the lowest level among surveyed sectors, a position which was also shared with the construction industry. In addition, the manufacturing and service sectors also grew more pessimistic in May. Agriculture was the only sector for which confidence improved.
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 17.8 points to plus 13.6 points, the lowest reading since November 2017. The decline among activity indicators was broad-based. Firms’ investment and employment intentions dipped. Despite a weaker kiwi, intentions to export also declined. Profit expectations contracted sharply, and a sizeable number of firms still foresee credit difficulties ahead.