New Zealand: Business confidence drops sharply in August
August 31, 2011
Business sentiment deteriorated in August, amid mounting fears that a new recession may dent demand for the country's exports. According to the business confidence indicator published by the National Bank of New Zealand (NBNZ), in August, a net 34.4% of businesses expected better economic conditions over the coming year. The reading was down 13.2 points over the previous month's survey, when a net 47.6% of respondents expected better economic times in the next 12 months. Despite the drop seen in August, the index continues to linger above the 0-point threshold, which indicates that optimistic respondents outnumber pessimists. According to the NBNZ, the fall in confidence was felt across all sectors. Businesses' perception of their own activity for the year ahead deteriorated slightly compared to the previous month, with fewer firms expecting higher profits in the next 12 months. In addition, firms' export intentions to increase overseas volumes in the next 12 months slipped from a net 31.4% of respondents in July to a net 18.5% of respondents in August. Consequently, business investment prospects deteriorated, with a net 12.3% of respondents expecting better times to invest in buildings, plants and machinery in the next 12 months. The reading was down from the net 17.9% of businesses that responded positively to the July survey.
Author: Ricardo Aceves, Senior Economist