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Broad business confidence falls in December, but still points to 3-4% growth
December 17th, 2009Overall business confidence in New Zealand fell for the third month in a row in December, but indicators still point to 3-4% GDP growth over the coming year, the latest National Bank Business Outlook Survey showed.
Business confidence about the wider economy fell 4% from November, to a net 39% of respondents expecting better times for the economy in the year ahead.
National Bank economists said confidence fell for all the main industry groups monitored, although firms’ own activity outlook improved 3% to a net 37% expecting better times in the next year.
The survey, particularly measures of firms’ confidence about themselves, is closely watched by the Reserve Bank of New Zealand due to its close correlation with GDP growth. The Reserve Bank said on December 10 that it expected to keep the Official Cash Rate on hold at 2.5% until ‘around the middle’ of 2010.
The sectoral picture across each measure is somewhat mixed. But generally speaking the construction sector showed an easing trend while others picked up the baton. Construction has gone from being top of the pops for activity, profits, employment and investment to rank 2nd, 4th, 3rd and 1st respectively.
The North Island showed an improving trend and is now most optimistic when it comes to own activity, profits and investment. Conversely, perception across all these indicators eased in the South Island, although the south remains more optimistic regarding hiring staff.
When we roll such readings from the survey into our composite growth indicator, the economy could well be on track for 3 to 4 percent growth. Let the good times roll.
With economic improvement there is the inevitable pressure on prices. While inflation expectations eased a tad, pricing intentions nudged higher. A net 18 percent expect to be pushing up prices over the coming year. This is still low but the trend has been rising for three months.
Tags: Business Confidence, National Bank
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December 17th, 2009 at 4:17 pm
Another crackpot survey. I think it’s time for a Wally Survey. Hang on I’ll just pop out and ask the dogs if they expect extra biscuits next year………………jeeez the buggers will bark all night now. There you go folks, according to the dogs 2010 will bring at least 3 to 4 extra biscuits for a day of chasing sheep.
December 17th, 2009 at 4:21 pm
Are you on a farm Wally?
December 17th, 2009 at 4:21 pm
Wally,
I’d love to see some of your posts converted to Cartoons.
December 17th, 2009 at 4:25 pm
IF you look at the correlation of this survey with actual GDP over the past 26 years the survey has been running the correlation has been fairly robust.
I would beleive it over your dogs any day
December 17th, 2009 at 4:29 pm
Oh yeah….that Rat a too ee film was bang on about the squatters in the ceiling..still, must not complain..wild pork in the freezer and the plums are soon going to bring the deer down from the bush. At least the bag is on the chimney top for the summer and all tied down.
Come and tell the dogs that Welly.