Data Flash (New Zealand)
NBNZ Business Survey - February 2000
Key Points
General business confidence has remained stable at +21% (net respondents), according to the latest National Bank
business survey. The survey was taken during the first half of February.
However, companies have become slightly more optimistic about their own prospects over the year ahead, leading to a rise
from +35% to +38% (net respondents).
Consistent with that optimism, which is partly driven by improved prospects for exports, investment and employment
intentions have increased.
The stronger activity outlook and rising cost pressures have led to a further increase in the net share of businesses
who intend to raise prices over coming months (+26.0% versus 24.4%). However, expectations for CPI inflation over the
next year have fallen from 2.6% to 2.4%, possibly as a result of the low Q4 CPI result.
Commentary
The survey data is consistent with other indicators that are pointing to a favourable growth outlook over the year
ahead. We expect GDP to expand by a round 4% on the back of strengthening exports. High and rising capacity utilisation
will generate a corresponding increase in investment, but also pose a threat of rising inflation. Pricing intentions in
this survey are consistent with the results of January's Quarterly Survey of Business Opinion and reflect rising cost
pressure associated with a tightening labour market, rising energy prices and a low NZD. Our forecast is for CPI
inflation to peak at 2.8% at the end of this year.
Ulf Schoefisch, Chief Economist, New Zealand
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