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New Zealand Business Confidence March 2020

New Zealand: Coronavirus fears torpedoes business confidence in March

The ANZ bank business outlook indicator nosedived in March, hit by concerns over the outbreak of coronavirus. As a consequence, a net 63.5% of firms reported that they expect general business conditions to deteriorate in the year ahead, from a net 19.4% in February. The headline reading thus moved further below the net-0% threshold that separates pessimism from optimism among businesses.

March’s result reflected broad-based deteriorations. Export intentions plunged further into pessimistic terrain and hit a record low in March. Moreover, employment and investment intentions plummeted, as did profit expectations. Furthermore, capacity utilization swung strongly from positive to negative terrain.

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—nosedived to a net minus 26.7% in March, swinging from February’s net plus 12.0% and recording the worst result since March 2009.

Commenting on the release, Sharon Zollner, ANZ chief economist, stated:

“This will end. But with no one able to tell businesses when that will be, any attempts to shore up confidence are likely to get little traction in the near term. It’s going to get worse before it gets better, and firms know that. Rock-bottom confidence is the symptom, not the cause, of the woes in the New Zealand (and global) economy”.

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