New Zealand Economic Sentiment October 2020

New Zealand

New Zealand: Business confidence improves notably in October

October 8, 2020

The ANZ bank business outlook indicator improved considerably in October, according to a preliminary reading. As a consequence, a net 14.5% of firms reported that they expect general business conditions to worsen in the year ahead, up from a net 28.5% in September. However, the headline reading remained entrenched below the net-0% threshold that separates pessimism from optimism among businesses.

October’s result reflected an improvement in sentiment across the board. Export, employment and investment intentions as well as profit expectations strengthened in September. Moreover, capacity utilization improved from the prior month.

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—climbed to a net 3.6% in October, from September’s net minus 5.4%.

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

“Key tests for the economy lie ahead: the winding down of the wage subsidy and the lost summer for tourism. But we’re facing into those challenges in much better heart than looked likely a few months ago”.

FocusEconomics Consensus Forecast panelists project fixed investment to contract 10.7% in 2020, which is down 0.6 percentage points from last month’s forecast, and to increase 5.9% in 2021.

Author: Massimo Bassetti, Senior Economist

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New Zealand Economic Sentiment Chart

New Zealand Business Confidence October 20 20 0

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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