Business sentiment is ending the year at near a record lows.
Not only are firms looking ahead with trepidation for the general economy, they are looking at their own prospects much more negatively now too.
The ANZ Business Outlook Survey reports have never been this negative, except in the pandemic.
ANZ says the RBNZ appears to have achieved shock value with its sharp increase in the OCR, hawkish forecasts, and warning of deliberate recession in 2023. Many indicators are around Global Financial Crisis (GFC) lows.
Inflation pressures remain intense. Wage expectations jumped.
Wage growth is the key driver of non-tradable inflation. Reported past wage settlements were steady at +6.7% in December with a large surge in the retail sector, but a decline for manufacturing.
Each three months ANZ asks firms what their biggest problems are. Finding skilled labour remains the clear #1, but has definitely eased. Interest rates jumped the most compared to the last survey in September, but still rate well behind other costs.
The largest retreats were the fall in investment intentions and employment intentions, consistent with increased concern about the economic outlook. Pricing intentions remain the most dramatically above their historical average, with expected profitability the most under par.
Among firms intending to invest more, skilled labour shortages and the domestic economic outlook are the key drivers, with spare capacity reducing as a factor. Among firms intending to cut their investment, the biggest factor is the domestic economic outlook, but interest rates are increasing in importance.
ANZ said: "... if the Reserve Bank was going for shock value, they appear to have gotten it. The fall in business confidence is certainly dramatic, but while it’s at a fresh record low, it would be incorrect to read this as an indication that any recession is likely to be unusually severe. Rather, it’s unusually widely anticipated. It’s a situation unprecedented in recent decades for a central bank to admit it is deliberately engineering a recession."
Business confidence - General
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26 Comments
well lets hope the market is competitive and efficient....
the first drop in demand should see the pencils sharpened and the price increase letter put away....ha ha ha
its xmas, not april fools
any thoughts of the cash rate being lowered in only six months is dreaming imo
I compared current (Nov 2022) REINZ HPI values in Auckland regions to their respective values in Jan 2020 and Jan 2019 (arbitrarily chosen), and calculated the % drop required from current HPI levels to reach these values.
So far, all areas are yet to decline below Jan 2021 HPI values (except Auckland central which is currently sitting at 2.5% below Jan 2021).
Refer calculation snip here: https://ibb.co/0ZG5zrf
If we do see 20% - 25% further drops in Auckland, most Auckland regions will decline below Jan 2020 HPI values.
Some regions, such as Auckland Central, would need to undergo a 13.6% drop from current HPI values, to effectively evaporate all gains from the Covid period (taken as Jan 2020 onwards...)
Whats so special about the pre covid high water mark for Property in Dec 2019? , it has no basis in yield returns or price to income etc. it's wishful thinking to think this level will provide any support in a falling market, let along a crashing market.
The market will keep correcting until people can afford to buy, and as Tony the Comb said today,
- For the second month in a row increases in mortgage interest rates have made buyers step back from the market. Many no longer qualify for a loan.
Sometimes we get these lurkers who make their first post with some data analysis / prediction which has already been done many times before on here. As you say, it's wishful thinking. They usually start with their conclusion and work backwards, picking up "arbitrarily chosen" data along the way that conforms to their bias. When they tell you it's arbitrary, you know it's not.
Hi NZdan & IT Guy, a lurker is absolutely what I have been, as I am only just slowly coming to grips with all the factors at play and have had little to add in the past. A spruiker I am not, I am fully aboard the DGM train, choo choo! Upon re-reading my comment I now understand why my intentions have been mistaken.
I provided my analysis because from what I have read in the comments this year, I had not seen similar calculations comparing where we are to where we have been, and the % changes required to get there. I was quite pleased with moving on from analysing the chaos that has been this year and onto providing myself figures to help me understand where we might be headed in 2023, in comparison to years past.
kyle.uerata@anz.com ....sign up! And then you can tell them. (who could be bothered, quite frankly)
Undoubtedly. The double sugar hit from wage suppression and increased demand for local goods and services should help further enrich their rich voters at the expense of working class and future generations.
Seymour is pork-barrelling the c**p out of migration settings by promising to remove wage thresholds and skill classifications from the visa process altogether.
We have increased all the staff salaries well above industry standard. Plenty of customers and sales Nov and December. We have increased stock asking prices and there has been no resistance yet. Somehow I can't see things being this good next year but I have been saying this all year.
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