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New Zealand Business Confidence February 2020

New Zealand: Coronavirus fears sap business confidence in February

The ANZ bank business outlook indicator fell in February, mostly hit by concerns over the outbreak of coronavirus in China. As a consequence, a net 19.4% of firms reported that they expect general business conditions to deteriorate in the year ahead, from a net 13.2% in December, which had marked the highest print in two years. The headline reading thus moved further below the net-0% threshold that separates pessimism from optimism among businesses.

February’s result reflected deteriorations in the activity outlook, employment and investment intentions, as well as reduced capacity utilization. Moreover, profit and exports expectations dropped, with both now laying in pessimistic terrain. On the flip side, ease of credit expectations improved although they remained entrenched in pessimistic territory.

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—declined to a net plus 12.0% in February, following December’s net plus 17.2%. However, the activity outlook for all the covered sectors remained in positive terrain, with the agriculture sector representing the only exception.

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