New Zealand Economic Sentiment July 2020

New Zealand

New Zealand: Business confidence continues its recovery in July

July 19, 2020

The ANZ bank business outlook indicator recovered further ground in July as the country lifted lockdown, although sentiment remained downbeat. As a consequence, a net 29.8% of firms reported that they expect general business conditions to deteriorate in the year ahead, from a net 34.4% in June. The headline reading however remained deeply entrenched below the net-0% threshold that separates pessimism from optimism among businesses.

July’s result reflected broad-based improvements. Export, employment and investment intentions as well as profit expectations were less pessimistic than in June. Furthermore, capacity utilization rose considerably.

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—jumped to a net minus 6.8% in July, from June’s net minus 25.9%.

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

“New Zealand is in an enviable position (touch wood), with activity largely back to normal, as demonstrated by traffic and spending data and many other indicators. After the rigours of lockdown we deserve a pat on the back and a little splurge. However, an inconvenient truth remains – there’s a very large economic hole where tourism used to be. And the hardest-hit sectors – accommodation, hospitality, and retail – punch above their weight when it comes to employment”.

FocusEconomics Consensus Forecast panelists project fixed investment to contract 9.7% in 2020, which is up 1.4 percentage points from last month’s forecast, and to increase 7.5% in 2021.

Author: Massimo Bassetti, Senior Economist

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New Zealand Economic Sentiment Chart

New Zealand Business Confidence July 20 20

Note: Percentage of respondents expecting improvement in general business conditions minus percentage expecting deterioration. An index number above 0 indicates that optimists outnumber pessimists. The survey is not conducted in January.
Source: ANZ Bank Business Outlook.

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