The construction industry is leading business confidence higher in the latest National Bank Business Outlook Survey, reflecting expectations of the Christchurch rebuild kicking into life.
However, the bank’s chief economist Cameron Bagrie warns the improving sentiment is not occurring throughout the economy, with export commodity prices still weakening and the government’s belt-tightening keeping consumers’ wallets locked away.
Nonetheless, a net 34 percent of businesses expect better times in the year ahead, up six percentage points from the February survey, and sentiment is even stronger when firms are asked what they expect for their own businesses.
A net 39 percent of the 421 firms nationwide which responded to the monthly survey say the year ahead looks better for their own enterprise, up eight points on last month to a 7-month high.
Employment, investment and profit expectations were also on the rise, although Bagrie warned there could be an element of current optimism being based on the expectation that “it surely can’t get any worse?”
“The process of balance sheet repair has further to run. Commodity prices are easing. Tighter fiscal policy will take more money out of our pockets than we get back,” he said, but there were rays of sunshine among the challenges with agricultural output up strongly after a good growing season, higher property prices and “a lot” of improvement in the global economy, at least for now.
The latest survey showed New Zealand was “moving in the right direction, but with a sting in the tail,” said Bagrie. “Improvements are being led by housing and construction. It’s growth, so we’ll take it, but with the current account deficit at 4 percent of gross domestic product and net external liability position at 72 percent of GDP, the housing market can only get us so far.”
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2 Comments
The business confidence statistic always amuses me. It was net positive during the Asian Financial Crisis (1998-1999), then negative when the economy briefly improved around 2000, then positive again as the dotcom bubble burst and the stockmarket collapsed in 2001-2002 then negative when the economy actually boomed 2003-2007, only actually improving when we entered the GFC - and it's been positive ever since.
The only thing that can be deduced is that businesses are more confident when the economy is already bad (ie they think it can't get any worse).
So clearly the current economy is bad since most businesses see it improving!!
Classic!!!!
Aus is starting to do it tough too I feel. Working in the development industry I deal with a lot of retail sector people, as well as developers of course. Most of the people I'm dealing with view things pretty grimly.
I think we'll see the safety valve of Aus jobs for kiwis tighten, things are going to be interesting for NZ unemployment from here on in.
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