Kiwi business confidence bounces from decade low in September, still in the red
- 27 September, 2018 04:00
New Zealand business sentiment lifted in September from a decade low even as firms remained pessimistic overall, a private survey has showed, a result likely to soothe concerns that the sector's mood could drag on economic growth.
An ANZ Bank survey showed a net 38.3 per cent of respondents expected the economy to deteriorate over the year ahead. That compared with 50.3 per cent in the previous poll, which was its lowest reading since 2008.
The New Zealand dollar jumped as high as $0.6682 from $0.6646 after the release - it last stood at $0.6673.
"The growth signal coming out of the survey remains weak, certainly," said Sharon Zollner, ANZ chief economist. "But if the indicators continue to rebound, it will increase the odds that while the economy may have hit a pothole, the wheels are not falling off."
The Reserve Bank of New Zealand (RBNZ) said in August that gloomy business confidence was a major risk that could result in firms holding off on investment, dragging on growth and increasing the chances of another cut in official interest rates.
At its next policy review, the RBNZ is widely expected to hold rates at a record low of 1.75 per cent and signal that it plans to hold them there for an extended period of time.
The survey also showed a net 7.8 per cent of respondents expected their own businesses to grow in the next 12 months, up from 3.8 per cent last month.
Still, firms' intentions to invest was the sole measure that continued to deteriorate, falling to -9.2 per cent from -4.7 per cent the previous month.
Trade figures released earlier in the day suggested that negative investment intentions were not yet filtering through into action, with imports of capital machinery rising two per cent in August.
Firms cited regulation as their top concern in the ANZ survey and the retail sector, which is the most affected by labour and wage policy changes, was the most gloomy.
That supported anecdotal evidence that the drop in business confidence since the Labour-led government took over last October was largely driven by business concerns around its policies.
Firms had complained about a five per cent hike in the minimum wage in April, uncertainty over new environmental and immigration regulations and fears that international investors would be spooked by restrictions on foreign home-buying and on new offshore oil-and-gas exploration permits.
In response to business concerns, Prime Minister Jacinda Ardern has announced the formation of a business council to advise her on economic issues.
(Reporting by Charlotte Greenfield and John Mair; Editing by Eric Meijer and Neil Fullick)