NZ business confidence slips from 7-month high in April

New Zealand business confidence slipped from a seven-month high as sentiment waned in retailing, manufacturing, agriculture and construction.

A net 30 percent of firms were optimistic about the general economy in April, down from 35.8 percent in March, according to the ANZ Business Outlook. Sentiment improved in the services sector.

The survey shows business confidence remains sturdy, recording the third straight month of net optimism after six consecutive months of pessimism. The biggest decline in April came from export intentions, which dropped to 23 percent from 32 percent in March, likely driven by the high New Zealand dollar.

“Business confidence remains elevated, despite easing in April,” said Cameron Bagrie, ANZ Bank New Zealand chief economist. The latest survey is “consistent with an economy entrenched in a robust and steady economic expansion. We continue to pencil in 3 percent growth over 2015. That’s still centre-court performance.”

Firms’ own activity expectations slipped 1 point to what Bagrie called a “lofty” 41 percent, well above the historical average of 27 percent. Those planning to hire more rose to 22 percent from 21 percent, while profit expectations eased back to 26 percent from 30 percent.

Residential investment intentions slipped to 35 percent from 38 percent and commercial construction intentions rose to 45 percent from 43 percent.

Pricing intentions fell, with a net 23 percent expecting to raise prices, down from 28 percent in March. Inflation expectations were unchanged at 1.8 percent.

“If such signals are sustained, the official cash rate is likely to be headed lower,” Bagrie said.

The Reserve Bank is expected to keep the OCR unchanged at 3.5 percent tomorrow, while dropping reference to the possibility it could rise.

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