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BusinessDesk-NZ business confidence arrests three-month slide, recovery looks ‘patchy’

BusinessDesk-NZ business confidence arrests three-month slide, recovery looks ‘patchy’

By Paul McBeth

New Zealand business confidence picked up this month, arresting a three-month decline, as companies apparently shook off fears that ongoing global volatility will plunge the local economy into another slump.

The National Bank Business Outlook survey showed a net 18 percent of companies are picking an improvement in the economy over the next 12 months, up from a net 13 percent in the October survey. Firms’ own activity outlook rose three points to a net 29 percent expecting better trading conditions in the coming year.

“Amidst a worrying global backdrop, most noticeably in Europe, this is not a bad reading to achieve,” the bank’s chief economist Cameron Bagrie said in his report. “For now we appear fine, and a bastion of strength, in a relative sense, compared to a host of other Western nations.”

Local companies have been more pessimistic in recent months as the sovereign debt crisis in Europe deteriorates, while US policymakers struggle to rein in massive fiscal deficits, sparking fears the world may face another global downturn.

The National Bank survey showed firms have pared back their export intentions, with a net 16 percent of respondents seeing growth in foreign sales, compared to a net 21 percent a month earlier.

However, on the domestic front, there was an uptick in expected manufacturing volumes and a strong rise in livestock investment intentions.

Capacity utilisation improved in the month to a net 19 percent from a net 17 percent a month ago, and livestock investment intentions climbed to a net 26 percent of firms saying it will get better from a net 14 percent in October.

The survey was taken before the re-election of the incumbent National Party-led administration.

A net 4.3 percent of New Zealand businesses expect profits to increase over the coming 12 months, up from a net 1.6 percent in October, and investment intentions are up to a net 12 percent of respondents from a net 8.7 percent a month earlier.

Still, employment intentions are down to a net 5.9 percent from a net 9.9 percent of firms looking to take on new staff in October, and a net 18 percent of firms expecting to lift prices over the next year was barely changed from a month earlier.

Bagrie said the results are a “hodge-podge of pluses and minuses but with some relative respectability,” and the survey indicates 3.5 percent annual gross domestic product growth.

“There is growth, but it is scratchy and patchy,” he said.

Construction expectations were mixed, with residential building intentions falling to a net 19 percent of firms picking an uplift in construction, from a net 29 percent a month ago, while commercial intentions rose to a net 27 percent from a net 19 percent in October.

Firms got less pessimistic about securing funding, with a net 3.4 percent saying they expect access to credit to get worse in the coming year, compared to a net 9.8 percent of pessimists a month ago.

Companies’ one-year-ahead Inflation expectations were stable at 3.1 percent, while interest rate expectations declined, with a net 41 percent predicting a rate hike in the coming year, down from a net 57 percent in October.


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"....a bastion of strength..."

What utter rot.

Oh but only a "relative" bastion of strength.

ok, so two American banks go under in 2008 and we're in a world recession. Whole countries in Europe go under in 2011 and the future looks great... At worst a little patchy ! What the frik am I missing?

You know too much mandalay.  Ignorance is bliss.  Think of it this way if everyone was bearish, then we would be at the bottom, since confidence is highesh we still have a long way to fall. 

oh, if only you were wrong skudiv ! Going to be an interesting year or two. Am keeping my powder dry :-)

I actually used to think bagrie was quite good but in more recent times that he's not much better than the others. I've actually come around a bit to tony Alexander, his recent reports are rightfully bearish, much more so than the other economists. And for once he has become a bit more bearish on housing

Hooray somebody has found the confidence fairy. Everybody was wondering where it had gone...

Somebody bottle that magic confidence dust before it vanishes again...

When next your windscreen is shattered by a spray of metal spewing from the unguarded wheels of a 40 ton lorry doing 110kph past you in a 30kph being resealed again section of road....don't be happy....that's your govt make work scheme at work....that's why wild bill has borrowed feed the construction companies...and reseal the resealed roads again and again.....oh and your vehicle insurance premium is set to rise...enjoy!

 "The proportion of households nationwide who spend 30 per cent or more of their income on housing rose from 19.5 per cent to 21.8 per cent over the past two years." herald

The recession grinds on and on...this is the new normal...get used to it....there is no escape to utopian wealth for YOU....for bankers and fatcat pollies this rule does not apply....don't YOU receive a $5 million a year salary...your fatcat banker boss does....don't YOU receive a half million dollar a year salary......your fatcat bureaucrat does.....and your useless polly just got a fat pay rise...from the fatcats in the bureaucracy that dishes out the fat salaries to fatcats in the state sector...

Days to the General Election: 26
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