New report reveals drop in business confidence
BUSINESS confidence has joined the slide set last week by consumer confidence indicators.
The ANZ Business Outlook for April, released yesterday, reported both headline business confidence and firms’ views of their own activity dipped.
The construction sector fell sharply, despite perceived easing in credit availability.
ANZ chief economist
Sharon Zollner said the construction sector stood out last month.
In short, its confidence plummeted, own activity plunged, employment indicators were mixed, expected profitability plunged to the lowest level since 2009 and pricing intentions eased.
Also, investment recovered, capacity utilisation was unremarkable and residential construction intentions fell to their lowest since mid2015.
Commercial construction intentions fell four points but were still higher than November. Perceived ease of credit continued to recover but remained negative, Ms Zollner said.
Some of the construction sector data seemed at odds with activity and pricing in the housing market after finding a floor and the pipeline of activity from KiwiBuild on offer.
‘‘The data is volatile but expected profitability has been in decline for the past 18 months, perhaps reflecting the sector is hitting resistance in terms of its ability to pass higher costs on,’’ she said.
A net 23% of businesses were pessimistic about the year ahead, down three points from March, Ms Zollner said.
Last week, the April ANZRoy Morgan Consumer Confidence dropped 7.5 points to 120.5.
In the business confidence survey, all sectors were in the red. The services sector was the least pessimistic and agriculture the most.
Agriculture did manage a small gain on March.
Firms’ views of their own activity — which had the stronger correlation with GDP growth — eased from 22 to 18, she said.
Manufacturing and agriculture lifted. Construction fell a ‘‘startling’’ 38 points. Excluding construction, the aggregate index only fell one point.
Profit expectations reversed March’s lift, back from 6 to 1.
Finance Minister Grant Robertson releases his first Budget on May 17.