Confidence falls amid poll nerves
Businesses’ optimism about the economy fell in the September quarter onew pre-election jitters, but companies still expect better times ahead.
A seasonally adjusted net 7 per cent of firms surveyed in the New Zealand Institute of Economic Research’s quarterly survey of business opinion expect better economic conditions in the coming year versus 17 per cent in the June quarter.
“A decline in business confidence is not unusual heading into a general election, as businesses and households hold off committing to major spending plans given the uncertainty over the formation of the new Government,” said NZIER’s principal economist Christina Leung.
The incumbent National Party and the Labour-Green bloc face talks with New Zealand First leader Winston Peters to form a Government after there was no outright winner in the September election. Peters has said he will not decide before all votes are counted, due by October 7.
NZIER’s Leung said the fall in confidence “does tend to be temporary” but will depend on how long it takes to form the Government and what it looks like. But she said the fall in confidence was less severe than before other elections. On average, the pre-election fall in confidence has been 19 percentage points, she said.
Confidence fell in most regions, although Northland an exception.
A seasonally adjusted net 13 per cent of firms surveyed experienced stronger trading in the three months to September versus 17 per cent in the June quarter. But in terms of expected activity, a seasonally adjusted 27 per cent predict an improvement versus 24 per cent in the June quarter.
Firms’ earnings fell, with 6 per cent showing worse profitability in the September quarter, compared with 1 per cent in the June quarter. But 13 per cent expect better profitability in this quarter, up from 6 per cent.
Building sector confidence fell again, to 3 per cent in the September quarter from 18 per cent in June and 31 per cent in the March quarter. NZIER noted that June quarter gross domestic product data showed another contraction in construction and “indicators suggest further softening . . . is likely in the near term”.
The services sector also saw a fall in confidence, to 2 per cent in September from 20 per cent in June.
Firms continued to struggle to find labour, with a net 46 per cent saying it was hard to find skilled workers and a net 27 per cent struggling with unskilled staff.