Economic Note (New Zealand) NZ - NBNZ Business Outlook Survey - September 1999
The NBNZ business confidence index ebbed back slightly in September, with a net +17% of respondents now expecting
conditions to improve over the next twelve months, down from a net +20% in August. This is the seventh consecutive
monthly decline from the recent peak of +68% recorded in February.
Despite the slight decline in business confidence, respondents' expectations for their own businesses remain stable at
relatively high levels. Firms' expectations of their own investment intentions edged up, profitability expectations and
capacity utilisation remained reasonably stable, while export intentions continued to remain robust. Respondents'
expectations for interest rate rises increased sharply, with a net +80% now expecting an increase over the year ahead.
On the inflation front, pricing intentions were moved up, with a net 14% of respondents intending to raise prices, while
annual inflation expectations edged up to 2.1%.
National Bank Business Sep-99 Aug-99 Jul-99
Outlook Survey
Business Confidence +17 +20 +24
Activity Outlook +38 +39 +38
Exports +44 +45 +40
Investment +18 +15 +17
Capacity Utilisation +31 +30 +24
Profits +23 +22 +22
Pricing Intentions +14 +12 +11
Inflation Expectations 2.1 1.9 1.8
Commentary
The sharp increase in the number of respondents expecting an increase in interest rates together with rising political
uncertainty in the run-up to the November election appears to have further dampened confidence over the month. However,
the more reliable activity indicator suggests that the growth prospects remain reasonably good, providing support to the
contention that the economy may not have been as weak as suggested by the June quarter GDP data. From a RBNZ
perspective, perhaps the most interesting feature of these data were signs of an upturn in inflationary pressures,
evident in a rise in both pricing intentions and inflation expectations.
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