New Zealand: Business confidence jumps to highest level in over three years
June 27, 2013
According to the business confidence indicator reported by ANZ, a net 50.1% of respondents to the June survey expect economic conditions to improve in the next 12 month. The result came in above the 41.8% of respondents obtained in the May survey and marks the highest level since February 2010. Thus, the index moved further above the 0-point threshold which indicates that optimistic respondents outnumber pessimists.
According to ANZ, business sentiment improved in almost all sub-categories, notably in the construction sector, which continues to show rising optimism. In addition, confidence in the agricultural sector rebounded strongly in June, after firms struggled with the worst drought in about 70 years in late February and March. Moreover, businesses' own activity expectations - a better predictor for economic activity - also improved over the previous month, pointing to an upward trajectory. ANZ added that "after years of stop-start slog it is genuinely good news to see confidence lifting in more sustained fashion".
High levels of business confidence bode well for investment going forward. FocusEconomics Consensus Forecasts panellists expect fixed investment to grow 7.7% in 2013, which is up 0.3 percentage points from last month's estimate. For 2014, the panel sees fixed investment decelerating to 8.3%.
Author: Ricardo Aceves, Senior Economist