NZ business confidence rises to 6-month high

NZ business confidence rises to 6-month high amid economic pickup

By Tina Morrison

Nov. 30 (BusinessDesk) - New Zealand business confidence rose to a six-month high in November, signalling a pick up in the economy.

A net 14.5 percent of businesses were confident about the general outlook for the economy over the coming year, up from 10.5 percent last month, according to the ANZ Business Outlook survey. A net 32 percent of firms see their own activity expanding in the coming year, up from a net 23.7 percent in October.

While the New Zealand economy is being weighed down by slower housing markets in Auckland and Christchurch, a surplus of labour and low prices for dairy products, the country's largest commodity export, it is being bolstered by record tourism and migration, wider housing market strength outside of Auckland, and a lower New Zealand dollar, according to ANZ Bank, which is the only bank of 14 polled by Reuters that doesn't expect the Reserve Bank to cut interest rates next month.

"Our composite growth indicator (which combines sentiment measures from both business and consumers) is flagging the potential for GDP growth of north of 3 percent," ANZ New Zealand chief economist Cameron Bagrie said in his report. "After a half-year hiatus, it's pretty clear the economy is starting to pick up again."

The service sector is the most optimistic, with confidence in the outlook for the economy improving to a net 26.7 percent from 18.3 percent last month. Agriculture recorded the worst reading with a net 12.5 percent of firms pessimistic about the outlook, although sentiment had improved from the 20.5 percent that were pessimistic last month.

Optimism improved in the construction sector, with a net 23.5 percent of firms upbeat about the economic outlook, up from 5.7 percent last month. Meanwhile sentiment weakened for the retail sector, with a net 12.7 percent optimistic from 14.1 percent last month, while manufacturing firms were equally split between pessimism and optimism, down from a net 9.1 percent who were optimistic last month.

Profit expectations across the survey improved, with a net 14.9 percent expecting an uptick in profitability, ahead of the 12.7 percent last month. Investment intentions also rose, with a net 14.6 percent expecting to make further investments in their businesses, up from 12 percent last month.

Employment intentions improved, with a net 13.5 percent expecting to hire more workers, up from 12.1 percent last month, and export intentions nudged higher to 22.8 percent from 22.4 percent.

Commercial construction intentions improved to 37.5 percent from 20.7 percent, while residential construction expectations slipped to 23.1 percent from 38.7 percent.

(BusinessDesk)

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