New Zealand Business Confidence

New Zealand

New Zealand: Business confidence rises to 13-month high

June 30, 2011

Business confidence rose in June, returning to levels seen before the earthquake of September 2010. According to the business confidence indicator published by the National Bank of New Zealand (NBNZ), a net 46.5% of respondents to the survey expect better business conditions in the year ahead. The monthly improvement was up 8.2 points over the May survey, when a net 38.3% of firms expected better business conditions for the next 12 months and has fully recovered from the post-quake decline in business sentiment observed in March. With the June result, the index moved further above the 0-point threshold, which indicates that optimistic respondents outnumber pessimists and represented the highest level in more than a year. According to the NBNZ, the higher reading in June was broad-based, as four out of the five main categories improved over the previous month, with the exception of agriculture. Moreover, firms' perception of their own activity for the next 12 months remained virtually stable compared to the May survey, while firms' profits expectations edged down by 3.5 points compared to the previous month. In contrast, residential investment prospects rose over the previous month, with a net 48.5% of respondents expecting better times ahead, compared to the previous month's 33.4% of respondents. Business investment expectations improved slightly, with a net 15.4% of businesses more willing to invest in building, plants and machinery in the following year, which was up from the previous month's net 14.8% of respondents.

Author:, Senior Economist

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