New Zealand Economic Sentiment August 2020

New Zealand

New Zealand: Business confidence sours in August

August 10, 2020

The ANZ bank business outlook indicator deteriorated heavily in August, according to a preliminary reading. As a consequence, a net 42.4% of firms reported that they expect general business conditions to worsen in the year ahead, down from a net 31.8% in July. Thus, the headline reading remained deeply entrenched below the net-0% threshold that separates pessimism from optimism among businesses.

August’s result reflected a pullback in sentiment across most components. Export, employment and investment intentions as well as profit expectations were more pessimistic than in July. That said, capacity utilization improved from the prior month.

Meanwhile, firms’ outlooks regarding their own activity—a metric which has a stronger correlation to GDP growth—plunged to a net minus 17.0% in August, from July’s net minus 8.9%.

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

“There are three prongs to this economic crisis: lockdown, closed borders, and an incredibly synchronised global slowdown that will hit exports. So far, we’ve navigated the first and managed to eliminate the virus in the process (go team!). But we’re still a long way from the finish line. And with temporary fiscal support measures poised to roll off in coming months, and the impacts of a closed border to be fully felt only when the peak-tourism summer season arrives, there are plenty of economic hurdles to clear yet”.

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:, Economist

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New Zealand Economic Sentiment Chart

New Zealand Business Confidence August 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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