Confidence at nine-month high
New Zealand business confidence rose to a nine-month high in June, led by services and agriculture, suggesting economic growth is set to accelerate.
A net 24.8 per cent of companies surveyed in the ANZ Business Outlook this month expect general business conditions to improve over the coming year, up from 15 per cent in May. A net 42.8 per cent see better times ahead for their own business, up from 38.3 per cent last month and the highest since July 2014.
Measures of profit, investment, capacity utilisation and pricing intentions all rose, although inflation expectations at 2.03 per cent were little changed from 2 per cent.
ANZ Bank New Zealand’s composite growth indicator is pointing to 4 per cent growth and while that would be “a stretch”, the economy “is running faster than current real GDP growth (2.5 per cent) would suggest”, said chief economist Cameron Bagrie. “Expect ‘official’ growth to lift.”
Confidence among farmers rose to a record in the second quarter, based on the latest Rabobank survey, buoyed by improving commodity prices. Yesterday’s survey shows confidence among agricultural firms jumped to 26.6 per cent in June from 8.3 per cent in May, while in the services sector it climbed to 32.6 per cent from 21.1 per cent.
Bagrie said official measures of economic growth are expected to move towards ANZ’s composite indicator, meaning a rate that was “upwind of 3 per cent as opposed to downwind of it”.
Investment intentions rose to 27.4 per cent from 23.5 per cent, capacity utilisation climbed to 33.4 per cent from 28.2 per cent, while pricing intentions edged up to 31.1 per cent from 30.2 per cent.
Manufacturing sector confidence improved, with a net 17.3 per cent seeing better times ahead, from 6.6 per cent in the May survey, while construction firm confidence was a net 7.7 per cent positive, compared to breakeven in the previous month. Confidence among retailers improved to a net 12.5 per cent from 8.7 per cent.
Not all the survey indicators were positive. Export intentions dropped to 27 per cent from 31.3 per cent and hiring intentions only edged up to 24.3 per cent from 23.6 per cent. Residential construction tumbled to 18.2 per cent from 45 per cent, which Bagrie said “would be a worry if sustained”, while commercial construction fell to 28.5pc from 36.8pc. —
Jonathan Underhill