New Zealand: Businesses turn pessimistic in December
December 30, 2010
According to the December business confidence index published by the National Bank of New Zealand, a net 29.5% of respondents to the survey expect better business conditions over the next twelve months. The reading was down 3.7 points from the last month's result. With the December fall, business confidence now is moving towards the 0-point threshold that separates optimisms from pessimism. According to the survey, firms' own activity prospects deteriorated slightly over the last month, with a net 34.5% of respondents expecting their own business to improve in the next 12 months (November: 35.3% of firms). Consequently, firms' profit expectations also fell compared to the previous month, with a net 14.8% of respondents expecting profits to improve in the year ahead (November: 15.4% of firms). In addition, residential investment intentions fell sharply compared to November, with a mere 2.9% of businesses expecting the outlook to improve (November: 31.1% of firms). According to the survey, residential investment prospects across the country remain anaemic, despite the reconstruction efforts related to the 4 September earthquake in Christchurch. However, business investment expectations continued to improve, as a net 8.3% of firms expect to invest in buildings, plants and machinery in the following year, which was up from 3.6% of businesses in November. The positive indicator suggests that business investment will start to pick up in the months ahead.
Author: Ricardo Aceves, Senior Economist