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New Zealand Economic Sentiment February 2021

New Zealand: Business confidence at over three-year high in February

The ANZ bank business outlook indicator rose again in February, recording the highest print since September 2017. As a consequence, a net 11.8% of firms reported that they expect general business conditions to improve in the year ahead, from a net 9.4% of firms reporting that they expected general business conditions to worsen in the year ahead in December. Therefore, the headline reading jumped above the net-0% threshold that separates pessimism from optimism among businesses.

February’s result reflected stronger investment and employment intentions as well as a higher capacity utilization and rising prices intentions.

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—rose to a net 22.3% in February from a net 21.7% in December, marking the strongest reading since March 2018.

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

“We are forecasting a wobble in demand in the first few months of this year as the true cost of the closed border for the tourism industry starts to become apparent. But it’s fair to say there’s not much sign of it yet, with the roaring housing and construction sectors filling the void, albeit fuelled by credit rather than foreign exchange earnings. Further monetary stimulus is looking less necessary by the week, and we no longer expect any more OCR cuts this cycle.”

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