Business confidence hits 6-month low
Business confidence continues to slide, with the number of firms positive about the year ahead almost outnumbered by pessimists.
The ANZ Business Outlook survey for March showed a net 3 per cent of businesses were generally positive about the year ahead. It was the lowest scorefor six months and marks the third month in a row of declining confidence.
The net score is the difference between those businesses confident about the year ahead and the number that expect conditions to worsen.
ANZ chief economist Cameron Bagrie said business confidence was in ‘‘the dog house’’. However businesses’ expectations of their own performance was stronger.
Own activity expectations, which tend to be seen as a more accurate guide to upcoming economic activity, showed a net positive score of 29 per cent, up from 26 per cent in February.
‘‘Firms are more optimistic about the outlook for their own business and this is a far more important signal for economic direction,’’ Bagrie said.
Employment expectations – those companies expecting to take on staff in the coming year – rose 4 points to a net 16 per cent positive, while profit expectations climbed 1 point to a net 13 per cent positive.
Investment intentions fell slightly, down three points to a net 11 per cent positive, while export intentions dropped two points to 21 per cent positive.
March’s survey showed a major split between sectors, with expectations in the construction sector bullish, while agriculture remained downbeat.
A net 21 per cent of construction firms expect the overall economy to improve over the next 12 months, while a net 47 per cent expect their own business to do better. Meanwhile in agriculture, a net 46 per cent of businesses expect conditions to get worse, while a net 2 per cent expect their own business to decline.
Westpac senior economist Satish Ranchhod said there was a ‘‘clear split in the economy’’ with the survey suggesting ‘‘moderate, 2016.
‘‘Business conditions are stronger in the construction sector, and to a lesser extent the services sector, than in other parts of the economy. That’s consistent with the very large pipeline of construction work in the economy, especially in Auckland,’’ Ranchhod said. ‘‘However, at the same time businesses in externally focused parts of the economy are facing headwinds including low prices for some key commodity exports and sluggish demand in some of our key trading partner economies.’’
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