New Zealand Business Confidence

New Zealand

New Zealand: Business confidence drops sharply but remains in optimistic territory

August 29, 2014

Confidence among businesses fell significantly in August, according to the ANZ Bank Business Outlook, which reported that a net 24.4% of businesses surveyed expect better economic conditions in the coming 12 months. The result came in markedly below July’s 39.7% and represented the sixth consecutive monthly decline. Nevertheless, business confidence is still above the 0% threshold that separates optimism from pessimism.

According to ANZ, business confidence fell in all of the 14 of the categories that compose the index and, according to ANZ, “confidence in the agricultural sector is now firmly in the red,” upon falling dairy prices. Firms’ expectations for their own activity, which is an even better predictor of economic activity, decreased significantly from 45.1 points in July to 36.6 points in August. In addition, lower activity expectation was recorded in all economic sectors. ANZ commented that, “seasonal elements – blame those colder months – are partially at play (confidence typically falls by about 4 points in July just because it’s July), but even allowing for this impact, confidence and sentiment are still trending down.” Furthermore, ANZ explained that, “the economy may be moderating, but it’s a case of slowing from a gallop to a canter: not a bad thing in terms of the longevity of the expansion.”

FocusEconomics Consensus Forecasts panelists expect fixed investment to grow 9.8% in 2014, which is down 0.3 percentage points from last month’s estimate. For 2015, the panel sees fixed investment slowing to 7.1%.

Author: Teresa Kersting, Economist

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New Zealand Business Confidence Chart

New Zealand Business Confidence August 2014

Note: Percentage of respondents expecting improvement in general business conditions minus percentage expecting deterioration. An index number above 0 indicates that optimists outnumber pessimists. The survey is not conducted in January.
Source: ANZ Bank Business Outlook.

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