New Zealand business confidence slipped in December, though profit expectations rose in a mixed bag of results from National Bank’s Business outlook survey, suggesting the nation in is relatively good shape as it faces “the global storm ahead.”
A net 17 percent of businesses expect better times for the economy in the year ahead, down 1 point on November’s survey, which had snapped three months of declines. A net 26 percent of firms see a pickup in their own activity in the year ahead, down 3 points from November.
The Business Outlook survey comes after diverse results from surveys on manufacturing, the services sector and consumer confidence, with the latter plunging, while services were stronger and manufacturing in contraction. Figures this week are expected to show the economy accelerated in the third quarter, though not enough to spur the central bank into raising interest rates.
“We see reasonable, but waning economic momentum into year’s end and a soft start to 2012 activity,” said Philip Borkin, economist at Goldman Sachs New Zealand.
“We still believe that (interest rate) cuts cannot yet be ruled out given the headwinds a further unwarranted tightening in financial conditions would provide.”
Inflation expectations continued to fall in the latest survey, with inflation seen at 2.99 percent in 12 months time, down from 3.1 percent in the previous month’s survey. Profit expectations climbed to 8.3 from 4.3 in the previous month. The biggest deterioration was shown in commercial construction, which tumbled to -3.2 from 26.7, while residential construction improved to 25.9 from 19.3.
Exports were little changed at 16.2, down from 16.4 while investment intentions rose to 14 from 11.6. Capacity utilisation slipped to 12.9 from 19.3. Employment fell to 5.3 from 5.9 and pricing expectations were little changed at 17.3 from 17.8.
National Bank chief economist Cameron Bagrie described the results as “a hodge podge of pluses and minuses” with absolute levels “solid” relative to historic averages but a broader picture that “things are slipping a little.”
“Although New Zealand has many factors in its favour going into the global storm ahead, we will not be immune,” Bagrie said.
“We are a small, heavily indebted trading nation. The global scene will be coupled to European developments and there will be fallout for New Zealand via commodity prices, funding costs and a new urgency to fiscal austerity.”
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.