New Zealand: Business confidence plunges in November
The ANZ bank business outlook indicator tanked in November. As a consequence, a net 57.1% of firms reported that they expect general business conditions to worsen in the year ahead, deteriorating from a net 42.7% of firms expecting bleaker general business conditions in the year ahead in October. As a result, the headline moved further below the net-0% threshold that separates pessimism from optimism among businesses.
Business grew more downbeat with regards to ease of credit, profit expectations and export and employment intentions. Moreover, inflation expectations hit a record high level.
Meanwhile, firms outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—decreased to a net minus 2.5% in October from a net minus 1.8% in September.
Commenting on the release, Sharon Zollner, chief economist at ANZ, stated:
“The survey clearly indicates weaker activity ahead, which is what the RBNZ is trying to bring about in order to lower inflation pressure. The construction sector is on the ropes, and is expecting to actually drop prices, in what would be a very welcome development from an inflation-fighting perspective, given how much construction costs have been contributing to CPI inflation.”