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New Zealand Business Confidence November 2019

New Zealand: Business confidence jumps but remains deeply entrenched in pessimistic territory in November

The ANZ bank business outlook indicator surged 16.0 points in November, the highest print this year, but nevertheless a net 26.4% of firms still reported 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.

November’s result reflected strong improvements in profit expectations and employment and investment intentions, as well as better expectations on the availability of credit. Moreover, both employment and investment intentions swung from pessimistic to optimistic terrain, although profit and ease of credit expectations remained in pessimistic territory. Moreover, November’s reading also reflected an improvement in export intentions and capacity utilization, which now lay in optimistic terrain.

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—soared to a net plus 12.9% in November, contrasting October’s net minus 3.5%. Notably, the activity outlook for the agricultural, manufacturing, retail and services sectors are in positive terrain, while the construction sector is the only one in negative terrain.

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