New Zealand: Business confidence plunges to record-low in December
The ANZ bank business outlook indicator tanked in December. As a consequence, a net 70.2% of firms reported that they expect general business conditions to worsen in the year ahead, deteriorating from a net 57.1% of firms expecting bleaker general business conditions in the year ahead in November. As a result, the headline moved further below the net-0% threshold that separates pessimism from optimism among businesses and marked the worst reading on record.
Business grew more downbeat with regards to ease of credit, profit expectations and export and employment intentions. Moreover, expectations of capacity utilization worsened sharply.
Meanwhile, firms outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—plunged to a net minus 25.6% in December from a net minus 13.7% in November.
Commenting on the release, Sharon Zollner, chief economist at ANZ, stated:
“Do the weak results of this survey corroborate or challenge the RBNZs expectation for a shallow recession next year? […] It depends on whether the weak intentions and expectations persist, or whether the shock value dissipates and things normalise somewhat. And that will depend on whether firms see demand dry up as abruptly as they are currently expecting.”