Business confidence 'deep in a quagmire,' National Bank survey shows

"Business confidence remains deeply stuck in the quagmire," the National Bank said following its March Business Outlook Survey. A net 39% of respondents to the survey said they expected general business conditions to deteriorate over the next year, from a net 41% in February. Confidence in the agriculture sector was considerably worse than in other sectors, with a net 74% of agriculture respondents expecting deterioration over the coming year, from 62% in February. The outlook for firms' own activity fell to a net 21% expecting tougher times ahead for their business, just off December's record low of 22% (20% in February). Investment expectations fell to a record low, with a net 19% of firms expecting to invest less in their business over the coming year. "When we dissect the trends in the survey, some underlying themes are apparent," National Bank economists said. "Expectations towards firms' own businesses are universally weaker in the North Island than the South, and the gap remains relatively constant at present. Retailing remains the stand-out under-performer across most aspects excluding investment intentions. The divide across rural and urban aligned regions has closed. It was the latter that initially felt the heat in 2008, but are now the first to show signs of stabilisation," they said. A net 28% of respondents said they expected to be employing less workers over the year (from 29% in February). "Job Summit aside, there is no shortage of job loss anecdotes. More encouraging news is that dairy prices have found a base, the grass is growing, and of course we're seeing more New Zealanders stay as opposed to gunning for the big OE," the economists said. Both residential and commercial construction looks set to fall over the year, with a net 32% of respondents for both categories expecting less construction in the year ahead (from 17% and 29% in February, respectively).