New Zealand: Business confidence remains high despite continued decline
May 2, 2014
Confidence among businesses decreased in April according to the ANZ Bank Business Outlook, which reported that a net 64.8% of businesses surveyed expect better economic conditions in the coming 12 months. The result came in below March's 67.3%. Nevertheless, business confidence is still well above the 0% threshold that separates optimism from pessimism.
According to ANZ, slightly lower levels of business confidence were recorded for 6 of the 15 categories that compose the business confidence indicator. However, business confidence in all of the major economic sectors except for agriculture was above 50 points, which means that a broad-based expansion can be expected. Compared to the previous month, firms' expectations for their own activity, which is an even better predictor of economic activity, decreased moderately from 58.2 points to 52.5 points. Furthermore, ANZ stated that it, “can't see evidence of a material turn across the economy,” and that, “the economy appears firmly stuck in the groove of a firm economic expansion despite financial conditions tightening of late.”
High levels of business confidence signal good prospects for investment going forward. FocusEconomics Consensus Forecasts panelists expect fixed investment to grow 9.7% in 2014, which is up 0.5 percentage points from last month's estimate. For 2015, the panel sees fixed investment slowing to 7.1%.
Author: Armando Ciccarelli, Head of Data Solutions