See the release from the National Bank:
Business confidence has plummeted. A net 9 percent of businesses expect worse times for the economy over the coming year, down 43 points from February. This is the second largest one month decline in business confidence in the history of the survey. Thankfully, there was a solid opening base (level) of confidence to absorb the large decline.
Other key gauges within the survey showed falls, though of differing magnitudes. Firms’ own activity expectations fell 22 points. A net 15 percent of businesses expect better times for their own business over the year ahead, down from a net 37 percent in February. The employment outlook has slipped into the red. Profit expectations fell from a net +15 to zero. Investment intentions dropped, but the magnitude of the fall was minor.
Our composite growth is pointing towards growth of 2 percent over the year ahead, around half what it was suggesting last month. The largest decline in confidence was recorded in Canterbury. Headline confidence fell a whopping 92 points. Firms’ own activity expectations in the region declined 55 points (from a net 47 positive to a net 8 percent pessimistic).
Stripping Canterbury out of economy-wide numbers still shows the same trend: confidence is down across each segment. The implication is simple: this is far from a local issue. It’s an economy-wide challenge.
No one can be blamed for not knowing what to make of it all, or what to do next. A large chunk of the hand-wringing in this month’s survey is likely due to uncertainty itself, which brings no good to anyone.
Facing exceptional times we should hardly be surprised to see exceptional movements in confidence. At times like this it is important to keep a sense of perspective. There is no doubt that the rebuild in Christchurch represents an event of epic proportions. Policymakers have responded and are working hard to stabilise the economy. We’ve seen a rapid fiscal policy reaction and the central bank has cut interest rates. Such steps will help underpin an eventual recovery.