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New Zealand Economic Sentiment November 2020

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

The ANZ bank business outlook indicator jumped in November, recording the highest print since September 2017. As a consequence, a net 6.9% of firms reported that they expect general business conditions to worsen in the year ahead, from a net 15.7% in October. However, the headline reading remained entrenched below the net-0% threshold that separates pessimism from optimism among businesses.

November’s result reflected stronger export and employment intentions as well as a higher capacity utilization and rising investment intentions and profit expectations.

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—strengthened from October’s net 4.7% to a net 9.1% in November—the strongest reading since December 2019.

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

“Monetary and fiscal policy have undoubtedly done their jobs this year. But it’s worth remembering that both work by bringing forward spending from the future. There’s no free lunch, and they need to be used judiciously. The true underlying momentum of the economy should become clearer over the next few months as the impact of one-offs fade, but the case for further life-support measures is becoming less clear by the day. And that’s certainly something to celebrate.”

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