New Zealand Business Confidence

New Zealand

New Zealand: Business confidence remains in optimistic territory despite decline

June 4, 2014

Confidence among businesses decreased in May according to the ANZ Bank Business Outlook, which reported that a net 53.5% of businesses surveyed expect better economic conditions in the coming 12 months. The result came in below April’s 64.8%. Nevertheless, business confidence is still well above the 0% threshold that separates optimism from pessimism.

According to ANZ, lower levels of business confidence were recorded in 9 of the 15 categories that compose the business confidence indicator as well as in all of the economic sub-sectors. However, firms’ expectations for their own activity, which is an even better predictor of economic activity, decreased only slightly from 52.5 points in April to 51.0 points. ANZ commented that, “[o]ptimists continue to massively dwarf pessimists but we’re on the slide,” and added that, “[w]hile it is tempting to focus on the fall in confidence and the likely reasons for it, the level of confidence is still very high, and for good reasons. Put another way: the question asked is whether business conditions are going to improve. They are pretty darn good now. More people are simply saying this may be as good as it gets – and they may well be right.”

High levels of business confidence signal good prospects for investment going forward. FocusEconomics Consensus Forecasts panelists expect fixed investment to grow 9.8% in 2014, which is up 0.1 percentage points from last month’s estimate. For 2015, the panel sees fixed investment slowing to 7.1%.

Author: Teresa Kersting, Economist

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New Zealand Business Confidence Chart

New Zealand Business Confidence May 2014

Note: Percentage of respondents expecting improvement in general business conditions minus percentage expecting deterioration. An index number above 0 indicates that optimists outnumber pessimists, while a number under 0 indicates more pessimists than optimists. The survey is not conducted in January.
Source: ANZ Bank Business Outlook.

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