Business confidence improved in November, although firms' inflation outlook continued to weaken, prompting National Bank economists to move their forecast for the next hike in the OCR back to the second quarter of 2011 from March 10, ANZ and National chief economist Cameron Bagrie said in the National Bank's monthly business outlook survey.
This is despite such business confidence levels suggesting economic growth over the next year of 4%, National Bank said.
A net 33% of businesses expected better times for the economy over the coming year in November, up 9 points from October, Bagrie said.
"Seasonal factors play a mild role in business sentiment from month to month and when we adjust for such influences, business confidence showed a 15 point lift, from +10 to +25. Last month’s mild turn upwards now shows signs of having legs," Bagrie said.
"Firms’ perception towards their own business continues to strengthen. A net 35% expect better times for their own business over the year ahead, up four points on the month prior. When adjusted for seasonal influences, the lift is nine points with sentiment rising from +23 to +32," he said.
However, pricing intentions continued to weaken, with a net 18% of businesses expecting to be raising prices over the coming year, down from a net 25% in October.
"We now expect the RBNZ to keep the Official Cash Rate at 3% until the second quarter of 2011. While we are encouraged by the lift in sentiment this month, challenges remain and we are particularly attuned to global developments. Low pricing pressure despite October’s GST spike gives the RBNZ scope to support the economy via accommodating monetary policy and continued low interest rates for a while yet," Bagrie said.
Here is the release from the National Bank:
Business sentiment continues to improve. A net 33 percent of businesses expect better times for the economy over the coming year, up 9 points on the month prior. Business confidence improved across all sub-components.
Seasonal factors play a mild role in business sentiment from month to month and when we adjust for such influences, business confidence showed a 15 point lift, from +10 to +25. Last month’s mild turn upwards now shows signs of having legs.
A perkier tone is apparent across the entire survey.
Firms’ perception towards their own business continues to strengthen. A net 35 percent expect better times for their own business over the year ahead, up four points on the month prior. When adjusted for seasonal influences, the lift is nine points with sentiment rising from +23 to +32.
This has taken expectations from below average to above average (NB: the historical average is +26).
Profit, employment and investment intentions all improved.
Such levels are a far cry from flagging an economy that is off to the races. You need to walk before you can run. Such readings merely take sentiment back to where it resided around June and July.
But every journey starts with small steps. October was the first tentative step. November has seen this lengthen to a stride.
Pricing intentions continue to weaken. A net 18 percent of businesses expect to be raising prices over the coming year.
We now expect the RBNZ to keep the Official Cash Rate at 3 percent until the second quarter of 2011. While we are encouraged by the lift in sentiment this month, challenges remain and we are particularly attuned to global developments. Low pricing pressure despite October’s GST spike gives the RBNZ scope to support the economy via accommodating monetary policy and continued low interest rates for a while yet.
Business confidence - Activity outlook
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11 Comments
The ANZ has surveyed the business sector and found what the current sentiment is. How come it differs from the negative, almost extremist negative sentiment being bandied around here on this site?? Suppose it must be spin and they are making it up, that busineses never said what is reported?
Bernard has already used up his daily allotment of one good news story , here at interest.co.nz .................... Did you see that USA corporate profits have reached an all time annualised high of $US 1.659 trillion ? He gave it a small mention earlier today ........
............... If you hear a low growling sound , and a grinding of teeth , don't worry .......... It's just Bernard finding a second good news story ............. He hates all that positive stuff ............ No one would front up here , if all was hunkadory ............. They'd pop off somewhere else for a good old Kiwi whinge .
Maybe businesses dont look strategically, I certianly havnt seen many that think about risks and hence how to manage them. Just look at the drivel from Roger Kerr on Peak oil, yet we have Richard Branson on the other hand with a completely opposite and concerned outlook....Kerr is a ACT mouthpiece, Branson a real World renowned business owner/leader.... Anyone who looks at the IEA's latest report and see's a huge slice of "as yet un-discovered" oil fields must question that assumption....and think about what happens when that oil that doesnt exist isnt found.....or maybe if only 1/2 of it is.....
How many businesses are one man bands or very small employers who are domestically focused? we have mostly avoided the recession.....
One point I found interesting, businesses are sedcribed as having lazy balance sheets, ie they are not borrowing enough.....so say the banks....
Somethings dont add up to well.......so it needs to be checked over....
regards
".....and when we adjust for such influences"....oh for fecks sake.
At least he is honest enough to say the figures came out of a sausage machine set to 'happy as she goes'.
Inflation data is little different too. Either Bollard hikes the rate or the kiwi slides and we know what that means for fuel costs...toss in the decline in oil supplies and we have us a hum dinger black swan flying right at Noddy.
Could fix the govt expenditure if tackled the big -time welfare costs of huge handout to those on attaining 65 yrs (it is an enormous amount). But many will see little point in worrying about being more self sufficient knowing that they will soon get this 'entitlement'. The older generation far too self-serving to allow that. Even the preachers on this site like the Wolly admit that nobody better touch this! And in meantime numerous baby boomers debt up large, no worries, get handout soon etc.If you really wanted to attack the root of the low savings attitude you would do something about this.
Not true Muzza...I think Key and Co should raise the retirement age at a steady pace until a peak of 70 is reached. Hang on..just put my collar on......ah that's better....now my son where were we?
I see Barry Obama has frozen federal pay for 2 years...a lead for Key!...hurry along John...you're being left behind...don't copy Barry though...freeze all salaries above $200ooo and eliminate the Higher Salaries Old Boys Club. Then reduce the top salaries by 5% a year for 5 years!.....
I've already given heaps with the change from 60 to 65 on the pension.....so ease off Muzza....pick on the pay bloated civil serpents and soe ceo fatcats.
The pension isnt huge.......its pretty minimal, you could take it away and then pensioners would jsut have to claim the benefit or I guess starve or freeze to death....some of the associated costs like health are a far bigger worry....One of Cullen's few good ideas was to start the Super-annuation fund to take us through that bulge.......so the ppl working today partially fund their retirement in the future.....yet of course the new Pollies have stopped that, and while I agree it makes no sense to borrow to invest at the moment, the tax cut made even less sense....and of course if they can the Pollies will raid it....jsut watch out for the future pile of IOU's or it being forced to "invest" in projects that a private company wouldnt touch with a barge pole...Then the fund will probably start to lose money and the Pollies will decide to unwind it and take the remaining lump sum....
I dont think any generation is noticably more self-serving than another.....I do think there will be a huge dose of reality this decade...I think you need to look at how the wealth has been concentrated ie the top 1% is getting far richer every day with zero trickle down....this was the same before the Great Depression.....so I strongly suspect it will correct again....and within this decade....
regards
I hear you Muzza!
But, I aint gonna change and Wolly knows it (the old dog :), don't let the grumpy old pensioner upset ya!
Key's goal is another term, if he gets it (he will need the Maori brotown party and Peter Dunny and a bit of luck in the marginal seats) then he will start changing things. SOE's and ACC part privitised, maybe a provision of the pension being raised to 67 over the next 20 years or some form of means testing in the future.
I have already accepted that when I am at retirement age there will be no pension. So my humble advice is start preparing now. If you start saving in your 20s you have twice as much then if you wait til your 30s. Good luck
I started saving at 17, after 30 years of paying into my main pension I / it lost 22% in 2008........I had minimised my payments anyway, they are poor performers now when in the 1980s they were well regarded....yet for me to transfer I'd take a huge hit so Im stuck.....One thing I do like about kiwisaver, the ability to shift..........however I dont think many of them are making ppl much....and could lose badly in 2011.....the tricky thing is to now when to fold and/or to know when to jump from one asset class to another....when ppl say everything is in a serious bubble then you have to consider sitting on the sidelines....
From now on its make my own plays.....
regards
Hope the coilar isn't a dog collar Wolly, if so can't take you for the walk today, sorry. Jeez, you missed out on collecting national super when you turned 60 yrs and feel hard done by . Your suggestion to cut the pay of top civil servants and the pols is very populist but fair enough in my books. Problem is that it's not very many individuals it doesn't save very much compared to the huge savings on cutting payments to national super would generate. That's if you are serious about making significant savings on welfare, as populist suggestions you made don't do it. Personally I have planned not to need any welfare, but my point is that while it's there many, possibly you by sounds of things, do not worry about things as nanny state is there for you when you put your hand out -which you have indicated is great.OK, but then you have little credibility in my books lecturing others about what to do
28- 29 yrs. I have some years on you, and can tell you that you are a youngster tracking well my friend.
No, the old dog can't bite me, probably would like to though. He does seem hypocritical in calling for slash and burn policies, but so long as they don't affect the handouts he feels entitled to. But takes all types to make the world go round I guess.
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