Business confidence highest on record


Business confidence is at a record high:

Our monthly survey of BNZ Weekly Overview readers has revealed a new sharp jump in sentiment regarding where the economy will be in a year’s time to a net 57% optimistic from 45.3% in May. This is the highest result on record and gels with other confidence gauges showing business sentiment at strong levels. The survey would have captured any positive impact of Fonterra’s announcement of a $1.20 lift in its milk payout as well as the government’s mid-May Budget.
Higher business confidence leads to more investment and more jobs.
That filters through to the government’s books through more PAYE, GST and company tax.

The survey asked how respondents felt about the increasing importance of our economic relationship with China.

The majority – 66% were unconcerned, 12% indifferent, and just 22% concerned.

Confidence high in spite of drought


The second BNZ Confidence Survey for 2013 has found that in spite of the spreading drought, export-suppressing high exchange rate, and worries about housing affordability, sentiment regarding where the economy is heading has improved to the highest level since July 2011.

A net 41% of businesses are confident about the year ahead compared with a net 32% in February.

In the construction and civil construction sectors activity is noticeably strong or picking up, and residential real estate remains buoyant with the long noted shortage of listings broadly continuing. The forestry sector is again reported to be in improving condition. But substantial caution prevails in the agricultural sector with worries about the drought.

One noticeably newly strong sector is recruitment. All six comments received were on the positive side so maybe this is an early indicator of things solidly cyclically improving.

The drought is spreading. Its impact won’t just hit farmers and those who service and supply them, it will have a  big impact on the tax take and the wider economy.

That business confidence is high in spite of that is encouraging.

Full results of the survey are here.

Confidence up 27% in BNZ survey – updated


I’m not deliberately doing a series of positive posts to cheer up your Monday, it is a coincidence that this makes three in a row.

The latest BNZ confidence survey shows a net 27% of respondents expect the economy to be better in a year’s time.

BNZ chief economist Tony Alexander said, “This is well up from balanced expectations in April and a net 23% pessimistic in March. It is also the equal highest reading on record – though we interpret this more as a sigh of relief lift in confidence rather than an indicator of strong economic activity levels in the near future. ”

He said the survey reasonably predicts the change in confidence which will be reported at the end of the month in the NBNZ Outlook survey which is more details and longer running.

The correlation is shown below:

dairy 10005


To put this in perspective, while improved confidence is welcome, it doesn’t signal a boom. 

For example accountants reported they were busy with more advisory and budgeting work and clients were slow in paying. 

There was a notable absence of generally negative comments from the agriculture sector which was cautious overall. Vets were upbeat but rural real estate was depressed. 

Architects reported low activity levels with patchy signs of improvement while construction showed mixed up and down signs and there were some positive signs in engineering though the sector wasn’t busy. 

Forestry/Manufacturing/Sawmilling reported some positive signs from offshore but indicated some businesses were likely to fail.

There was a little optimism in horticulture with interest from overseas markets but the sector reported labour shortages.

 Human resources reported low activity levels with some mild signs of improvement. 

Printing and publishing said business was difficult; property development was very bleak; non-residential real estate tenants were reluctant to commit though investor interest was improving and residential real estate reported a significant shortage of listings with multiple offers and properties selling quickly.

Retail was still weak while tourism and travel were getting weaker and worrying about the coming year. 

There were small increases in transport and storage but overall the sector was weak and the vehicle and automotive sector was still weak.

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