ANZ says business confidence has fallen a little but remains at high levels

Business confidence has dropped in April, but remains at high levels, according to the ANZ's latest monthly Business Outlook survey.

ANZ's chief economist Cameron Bagrie said a  net 32% of businesses expected general business conditions to improve over the year ahead in the latest survey.

"That’s well above the historical average of +8%. Confidence may be down marginally on the month prior – and has now fallen for two successive months – but such minor variability falls short of being statistically significant for surveys such as this," he said.

A net 30% of firms were optimistic about their own business’s prospects.

"This indicator is key: Ultimately it is what firms think about their own business prospects that kicks the components of a durable upswing – investment and employment – into gear," Bagrie said.

Generally he said there was a strong sense of “getting on with it” across the survey results.

"Profit expectations barely budged: a net 12% of businesses expect to be making more money over the year ahead. Investment intentions reached an eight-year high, with a net 18% of firms expecting an uplift. Employment intentions rose marginally. Export intentions continue to creep upwards: A net 20% of firms expect volumes to lift over the year ahead – the highest in a year.

"Residential investment intentions remain stratospheric (+50%), and commercial investment intentions rose to +35%."

Bagrie said the construction sector was the generally the most optimistic across survey measures, and the agriculture sector the least.

 'That’s what you get when the economy is buffeted by a city rebuild and the after-effects of a serious drought. Canterbury ranks number one for firms’ own activity expectations, expected profit uplift, employment (by a considerable margin), and investment."

Conversely, other common cited macro thematics were not clearly reflected within the survey results, Bagrie said.

"Auckland – that perfect storm of housing shortages and low interest rates – features in the upper half of the regional rankings but no more. Another surprise is export intentions nudging higher at a time the NZD continues to hit new highs."

The ANZ's combined composite growth indicator – combining indicators from both the Business Outlook survey and Consumer Confidence – is flagging 3.2% growth by September.