New Zealand: Business confidence bounces back in October
October 30, 2010
Businesses are turning optimistic again. According to the October business confidence index published by the National Bank of New Zealand, 23.7% of respondents of the survey expect better business conditions for the next twelve months. The reading was up 10.2 points from last month's reading and represented the first improvement in confidence after five consecutive months of deteriorating business sentiment. With the October improvement, business confidence moves further away from the 0-threshold that separates optimism from pessimism. According to the survey, firms' prospects of their own activity improved over the last month, with 30.5% of the firms expecting their own business to improve in the year ahead (September: 26.7% of firms). Investment expectations bounced back with 3.6% of the companies expecting to invest in buildings, plants and machinery (September: 1.9%). The reading suggests that business investment will start to pick up in the coming months. In addition, 9.5% of businesses expect profits to increase in the year ahead, well above the 3.4% of respondents tallied in September. The improvement points to an expansion in capacity and in fact 7.6% of firms plan to increase their staff over the next 12 months, which is up from the 0.6% the month before.
Author: Ricardo Aceves, Senior Economist