New Zealand: Business confidence gains ground from over-decade low in September
September 26, 2018
The ANZ Bank Business Outlook indicator showed that a net 38.3% of surveyed firms were pessimistic over general business conditions in the year ahead, a smaller proportion than August’s over-decade worst reading of 50.3%. As a result, the indicator moved closer up to the net-0% threshold that separates pessimism from optimism among firms. Sentiment improved in all sectors but agriculture, where it weakened slightly compared to August. Nonetheless, business confidence remains weak overall.
Meanwhile, firms’ positive outlook regarding their own activity—a metric which has a stronger correlation to GDP growth— climbed to 7.8 points in September from 3.8 points in August, which had marked the lowest level since May 2009. Despite the improvement, however, the index remains well below the long-term average of 27.0 points. Firms’ profit expectations and their intentions to hire additional workers rose modestly in September but their intentions to invest deteriorated further from the previous month. Meanwhile, a sizeable number of firms still foresee credit difficulties ahead.
Author: Javier Colato, Economist