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ANZ's business outlook survey shows net 39% of businesses expect conditions to be better in the year ahead
New Zealand businesses are feeling much happier about their lot.
Business confidence has surged to a 19-month high, according to the ANZ Bank's latest monthly survey of business opinion.
A net 39 percent of businesses expect general business conditions to get better over the year ahead, while a net 38% are optimistic about their own prospects for 2013.
ANZ chief economist said the reason for this sunny mood could be attributed to three developments.
"It’s summer - All that vitamin D is working its magic.
"The global scene continues to improve.
"There are better local nuances. Property prices keep rising. Building consents are up. It’s far from across the board: employment trends remain weak. However, we’re seeing more ticks than crosses."
The net 38% of firms optimistic about their own business’s prospects, is up from a net 31% in December. Manufacturers are particularly upbeat, with a net 48.7% of them expecting increased business activity in the next year.
"That’s well above average and points to the potential for solid growth. Likewise, profitability expectations, employment intentions and investment intentions are on the up," Bagrie said.
However, export intentions continued to languish with a meagre net 13% expecting a rise, against a historical average of 32%.
"The main culprit is obvious: a New Zealand dollar that continues to be out of line with local fundamentals," Bagrie said.
Expectations of price increases increased, but their levels "remain tame".
"We’ve been here before," Bagrie said.
"We’ve seen lifts in business sentiment in late 2009 and into 2010, mid 2011 and early 2012. Reality – growth-wise – has failed to match expectations. This doesn’t mean we ignore signals from business sentiment: they remain key components of our forecasting arsenal.
"What looks different this time around is that we’ve seen a modest lift in consumer confidence as well."
Bagrie said this fact gave credence to the argument that rises in business sentiment may be more substance than noise this time around.
"However, the reality check here is the lack of job creation, with cost containment still front and centre for businesses."
The ANZ's combined composite growth indicator – combining indicators from both the bank's Business Outlook survey and its Consumer Confidence survey – is flagging 2.8 percent growth by the middle of the year.