INDEPENDENT NEWS

Deutsche Bank: NZ Confidence Edges Back Slightly

Published: Mon 20 Dec 1999 12:45 AM
Data Flash (New Zealand)
NBNZ Survey: Confidence Edges Back Slightly
Key Points
The NBNZ business confidence index edged back slightly in December, with a net +21% of respondents expecting conditions to improve over the next twelve months. Consistent with the general deterioration in sentiment, respondents' expectations for their own activity, exports, investment, profits and employment moved lower over the month.
On the inflation front, pricing intentions remained unchanged, while inflation expectations moved sharply higher. In particular, a net 24% of respondents now expect to raise prices, while annual inflation expectations moved up to 2.6%.
:::::::::::::::::::::::::Dec-99:::::Nov-99:::::Oct-99
Business Confidence::::: +21::::: +25::::: +17
Activity Outlook::::: +35::::: +42::::: +39
Exports::::::::::::::: +38::::: +46::::: +45
Investment:::::::::::::::+11::::: +18::::: +16
Capacity Utilisation:::::+23::::: +28::::: +29
Profits::::::::::::::: +17::::: +24::::: +21
Pricing Intentions::::: +24::::: +24::::: +21
Inflation Expectations 2.6::::: 2.3::::: 2.2
Source: DB Global Markets Research, BNZ
Commentary
Despite the decline in confidence for the month, sentiment remains at levels consistent with an on-going recovery in activity over the December quarter. On a sectoral basis, the sharpest fall in confidence was recorded in the manufacturing sector, which is likely to reflect the increased cost of conducting business (the re-nationalising of the work place insurance scheme, the proposed repeal of the ECA & higher personal taxes) following the election of a Labour/Alliance government. For the RBNZ, the most significant feature of this survey is likely to be the sharp rise in year-ahead inflation expectations, which have now moved to their highest level since June 1997. The recent trend increase in this series suggests that expectations are responding rapidly to actual pricing developments and casts some doubt about the RBNZ's assessment that inflation expectations are well anchored at low levels. Nevertheless, despite the pick-up in inflation expectations, a sharp projected rise in Q3 GDP (released 23 December) and the recent weakness in the NZD, we expect the Bank to leave the OCR unchanged at their 19 January review, but to instead move the cash rate by +50bp at the 15 March MPS.
ENDS
This, along with an extensive range of other publications, is available on our web site http://research.gm.db.com
In order to read our research you will require the Adobe Acrobat Reader which can be obtained from their website http://www.adobe.com for free.
For answers to your EMU questions, check Deutsche Bank's EMU web site http://www.db.com/emu or email our helpline business.emu@db.com.

Next in Business, Science, and Tech

Broad-based growth as GDP rises 1 percent in June quarter
By: Statistics New Zealand
Judgment: NZ Steel v Minister of Consumer Affairs
By: New Zealand High Court
NZ banks accelerate lending in June quarter
By: BusinessDesk
Annual current account deficit widens to $9.5 billion
By: Statistics New Zealand
UPDATE: Stronger than expected growth
By: BusinessDesk
Economic growth figures highlight Govt fallacy
By: New Zealand National Party
Latest economic figures expose gloom merchants
By: New Zealand Council of Trade Unions
Whooshkaa! Our growth is better than you think
By: Kiwibank
Banks Slam Govt's Reserve Bank Bill
By: ACT New Zealand
No Need for Knee-Jerk Bank Bashing in New Zealand
By: ACT New Zealand
Near-record exports see current account deficit shrink
By: Statistics New Zealand
NZ dollar falls vs Aussie
By: BusinessDesk
Dairy product prices fall
By: BusinessDesk
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media