New Zealand businesses had a slow Christmas period but are expecting a happier New Year, according to NZIER’s quarterly survey of business opinion (QSBO), which showed general confidence had turned positive for the first time since June 2021.
The latest survey results showed a net 9% of firms expected economic conditions to improve in the coming months, up from 4% in the September 2024 quarter, despite 26% experiencing a decline in their own business activity during the final quarter of 2024.
NZIER deputy chief executive Christina Leung said this suggested the recent recession seen in Gross Domestic Product figures may have continued through the December quarter.
Firms included in the survey were the most positive about general economic conditions they had been in years despite a majority facing weaker demand in the run up to Christmas.
“Although sentiment has improved, and there are expectations of a recovery in activity, firms remained cautious about hiring and investment. A net 17% reduced staff numbers in the December quarter,” NZIER said in a media release.
The mood in the construction sector has improved most rapidly. A net 29% of building sector firms felt positive about the economic outlook, up from just 9% in the previous quarter. This sentiment was likely based on hopes lower interest rates will stimulate activity, as actual orders and output contracted.
Demand for retail and services was also weak during the quarter but both sectors saw a lift in confidence likely on the expectation that lower mortgage rates will give households more cash to spend in the future.
Sentiment in the manufacturing sector improved less than others. The lower Kiwi dollar likely supported demand for exports but high costs and weak pricing power continues to weigh on profitability.
Cost and pricing indicators show inflation continues to ease. The proportion of firms reporting higher costs fell to 35% in the quarter and the amount raising prices remained historically low at 10%.
“Weak demand continues to reduce capacity pressures, with in turn weighs on inflation pressures in the New Zealand economy. This is reflected by the continued dominance of the lack of sales which is reported by firms as the primary constraint on their business,” NZIER said.
Leung said there was nothing in the results to prevent another 50 basis point reduction to the Official Cash Rate at the Reserve Bank’s February meeting.
40 Comments
You get it. Would also like to see how the question is posed. Is it binary? Is there an option for 'I don't know'? If so, how is that that answer represented?
Had a meeting with a management consultant type last week buzzing over an Ipsos survey showing unbridled optimism in ASEAN among nations (he had already come out with an explanation for the why people answered positively - just his reckons). Looking at the list, Japan and South Korea were at the bottom - Japan is always as the bottom. I asked the management consultant why Japan and SK were at the bottom hoping that he might mention cultural bias in how people answer questions.
Net scores on expectations are a useful measure of aggregated expectations; nevertheless the obvious weakness is measuring 'confidence in expectations'. And what does N/A mean? If you're qualified to give your responses, you're likely to be a business leader. Expectations are 'applicable.'
@Cote d'Azur
NZD to USD Chart -10.55% (1Y)
I don't know where you get your streams of income from - but the above does not bode well for the average consumer.
As the price of Brent Crude in USD rises and the NZD falls, its a "double whammy' for petrol prices at the pump - all totally out of NZ Inc's control.
This will push NZ back into even more inflation and if they reduce interest rates, more money (DEBT) is created and NZ is back to more inflation and a bigger interest bill.
So as this is a financial website, can one ask your reasons for your optimism ?
Or as usual another negative miserable year for the majority of commentators on this site!
Everyone can have a bad day, week, month or year.
But if I allowed my mind to sit in a state of perma-doom, as I've seen for years on end here now, what a waste of a life that would be.
Both can be occuring at once.
It's very easy for the mind to pick out fault, and get fixated on that, whilst being totally blind to the majority of things that are just fine, if not more so.
Understandable on a fleeting basis, as new horrors come to light. But then there's people banging on about those same problems, day after day, year after year. If we took many commenters' repeated views as real, NZ is the most stinky-pooh, icky yuckiest tinpot dystopia, ever. When the reality is being a human in NZ in 2025, one of the most fortunate positions a human could hope to end up in.
"When the reality is being a human in NZ in 2025, one of the most fortunate positions a human could hope to end up in."
Only if you have a contrary point of reference....and the past is a foreign country. having said that, it is true that (at least) 30% of our population do indeed have a lived experience of a foreign county, though not necessarily from the same vantage point.
Meanwhile, reality for those required to 'optimism' may well see little to be enthused about.
Only if you have a contrary point of reference....and the past is a foreign reference
It'd go for today and in the past.
Meanwhile, reality for those required to 'optimism' may well see little to be enthused about.
You'll likely wake up tomorrow
Nutrition won't be a problem
No one's likely to shoot or enslave you.
If you're of decent character, your life should involve at least a handful of rich, reciprocal relationships
Some of many realities that greatly outnumber the perilous ones. Being heavily weighted towards a focus on the deficits, particularly in a circular loop, is not "observing reality"
Cote d'Azur,
All I do is look at the published numbers and my reading of them makes me somewhat pessimistic, not because I want to be, but because that's what the numbers tell me. I hope I am wrong. Nothing would make me happier than to see a sustained, productivity led recovery, but right now, I struggle to see it.
We're coming back boys and girls.
Interest rates down.
Filled jobs starting to go up.
Fast track pipeline creating work in primary industries and construction.
Consumer confidence and business confidence turning positive again.
New harmless and wealthy trade partner (UAE + rest of M.E) who cannot pursue import substitution for our agri products in the desert.
Tax deductions seeping through the real economy
New harmless and wealthy trade partner (UAE + rest of M.E) who cannot pursue import substitution for our agri products in the desert.
We're catching up to Vietnam. OK, they don't do kiwifruit, milk powder, and cherries. But they're an early mover compared to us. And they can also sell manufacturing.
The United Arab Emirates and Vietnam have signed a comprehensive economic partnership agreement (CEPA), the first free-trade agreement Vietnam has established with a Middle East country, the Vietnamese trade ministry said in a statement on Tuesday.
Under the CEPA, the UAE has committed to phasing out tariffs on 99% of Vietnam's exports, and Hanoi has pledged to remove tariffs on 98.5% of the UAE's exports .
https://www.reuters.com/world/vietnam-uae-sign-comprehensive-economic-p…
Seems to be a lot hanging on the historic assumption of the fact that lower rates will fire housing demand and consequently our NZ based “growth” Rates aren’t really that much lower and unemployment has only just started rising. IMHO I think this is a sugar rush reaction reflected in the surveys and after another quarter of weakness confidence could well fall away again. Can’t see fixed rates falling much in the near term with the structure of global yields having more impact from here than a tweak or 2 in the OCR. The weak NZD could help somewhat.
Yes pure hopium in terms of construction
Really not really.
A bunch of firms I interact with laid staff off end of 2024 financial year. 3 months later, they're regretting their decisions and lack of manpower.
There does look to be more activity in the pipeline this year, than the same time last year - although this time last year some crowds were still finishing projects conceived in the COVID era.
But super mixed bag. If your business was primarily related to greenfield subdivisions, maybe not a happy time. But plenty of optimism outside of that sector.
You keep talking about Canterbury. Things do seem ok there, I don't live there.
I also have a lot of Auckland contacts, most seem pretty busy.
Not everyone is pessimistic in a downturn, and many downturns aren't as severe as most anticipate. So there's likely optimism out there (and there definitely is, and much of it's warranted), that things will improve or not be as dire as anticipated. More than solely hopium anyway.
It appears to me that the people being asked about sentiment should be the indebted. They are the cohort that determine whether credit will expand or not and I doubt that cajoling them with declarations of optimism from the creditors will make much difference to their outlook.....extra money in the pocket however may.
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