Business self-confidence second worst ever in National bank survey

The business activity outlook for 2009 remains downcast with a net 20% of firms expecting worse times for their own business over the year, the latest National Bank Business Outlook survey showed. The negativity of firms' own outlook was up slightly from the record low at the end of 2008, but was still the second lowest score ever recorded. The net score of 20% consisted of 39% of firms expecting activity to worsen and 42% expecting it to remain the same. GDP tracks business self-confidence closely and the Reserve Bank will be watching this closely at it finalises its March quarter Monetary Policy Statement and its next Official Cash Rate announcement due on March 12. "Sentiment within the retail sector remains uniformly pessimistic with a whopping 52% expecting worse times ahead for their own business over the coming year," National Bank Chief Economist Cameron Bagrie said. A net 41% of respondents expected business activity (in the general economy) to get worse over 2009, which was 6% lower than at the end of 2008. Of the 428 respondents, a total 59% said they expected general business conditions to deteriorate. "The messages across the survey remain sombre," Bagrie said. Profits look set to be hit, with a total 55% of respondents expecting profits to decrease, and 31% saying they expected them to remain the same. One interesting category for the Reserve Bank of New Zealand will be the expected price rise/fall of goods and services, with a total 63% of respondents expecting prices to remain at current levels over the year, and 26% expecting an increase. A total 35% of respondents said they expected their business's employment numbers would decrease over the year, with 59% expecting staff numbers to remain the same. The amount of respondents expecting the unemployment rate to rise over the year was 90% (net 87%). Interest rates are widely expected to drop further over the year, with a total 74% of respondents expecting them to decrease. Only 4.5% said they expected an increase of interest rates in 2009.