New Zealand: Business confidence improves but remains deeply entrenched in pessimistic territory in October
The ANZ bank business outlook indicator jumped 11.1 points in October, but nevertheless a net 42.4% of firms still report that they expect general business conditions to deteriorate in the year ahead. The headline reading thus remained deeply entrenched below the net-0% threshold that separates pessimism from optimism among businesses.
October’s result reflected improving profit expectations and investment intentions, as well as better expectations on the availability of credit. That said, all metrics remained in pessimistic terrain. Moreover, October’s reading reflected a deterioration in employment and export intentions, as well of capacity utilization, which is now at a decade-low.
Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—declined to an over decade-low of net minus 3.5% in October, after reporting a net minus 1.8% in September. Notably, the activity outlook remains in negative territory for the retail, agricultural and construction sectors, while the manufacturing sector moved to positive terrain and the services sector showed a neutral outlook.