New Zealand Economic Sentiment June 2020

New Zealand

New Zealand: Business confidence continues its recovery in June

June 9, 2020

The ANZ bank business outlook indicator recovered further ground in June as the country progressed out of lockdown, although sentiment remained downbeat. As a consequence, a net 33.0% of firms reported that they expect general business conditions to deteriorate in the year ahead, from a net 41.8% in June. The headline reading thus remained deeply entrenched below the net-0% threshold that separates pessimism from optimism among businesses.

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

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—increased to a net minus 29.1% in June, from May’s net minus 38.7%.

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

“As New Zealand emerges into the light of Level 1 from a lockdown that succeeded beyond any reasonable hope, disruption has waned, and normality beckons. This is fantastic news, but there’s a huge tourism-shaped hole in our economy. The hardest-hit sectors – accommodation, hospitality, retail – are the biggest employers, and the resulting unemployment will have unpleasant feedback loops. People will feel comfortable going into a shop or restaurant – that’s a huge win – but whether they’ll feel comfortable spending money is another question again”.

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 June 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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