Confidence slumps to eight-year low
Business confidence has taken another tumble, falling to the lowest level in more than eight years.
The ANZ business outlook survey found a net 39 per cent are pessimistic about the economy over the coming year, a 29-point fall since October.
The latest survey is the first of its kind to be taken since the new Labour-led Government was formed.
Headline confidence was negative across all the five sub-sectors covered, with agriculture the most pessimistic.
‘‘Uncertainty around changing government policy, a softer housing market, and difficulty getting credit are likely culprits,’’ ANZ chief economist Sharon Zollner said.
‘‘The economy is at a delicate juncture as migration, construction and housing run out of steam as growth drivers.
‘‘Commodity prices are strong and a fiscal boost will come through in time, but at such times of transition, sentiment is more vulnerable.’’
Zollner said while it was the first survey of its type that ANZ had conducted since Jacinda Ardern became prime minister, ‘‘it would be too simplistic to ascribe the full move to the change of government’’.
‘‘There is a lot else going on. The softening in house price inflation is one obvious factor that shouldn’t be overlooked, as is the reported difficulty of getting credit.’’
So-called ‘‘own activity expectations’’ – what individual owners expect of their businesses remained positive overall, but fell sharply, down 15 points to a net 7 per cent positive. This was also the weakest measure since 2009.
The survey found a net 41 per cent of businesses expected it will become more difficult to obtain credit, the highest since the question was introduced to the survey in 2009.
ASB senior economist Jane Turner said the fall in headline confidence was not surprising, and was typically biased when Labour has been in Government.
‘‘However, the fall in own activity is concerning and if sustained will suggest material downside risk to the economic outlook,’’ Turner said.
The New Zealand dollar sank on the news to be buying about US68.4c, the lowest in more than a week.