Business hitting singles, not sixes

Business is on an extremely positive roll, but picking up ‘‘ones and twos’’ rather than big hits out of the park, according to an upbeat ANZ Bank survey.

Business confidence ticked up this month, pointing to the economy continuing to grow at a ‘‘hefty clip’’ this year, of about 3 per cent, according to the latest ANZ Business Outlook survey.

It shows a net 34 per cent of firms are optimistic about the general economy, up from 30.4 per cent in the previous survey.

The survey readings remains well above the long run average, suggesting robust economic growth.

And businesses don’t see any inflation on the horizon, with the lowest inflation expectations since 1999, reflecting past falls in petrol prices.

Some economists expect annual inflation will go close to zero in the March quarter, because of the dive in fuel costs.

Business are even more upbeat about their own prospects, at 41 per cent positive, which is seen as a strong leading indicator for economic growth.

It was the first ANZ survey since December.

It shows strong confidence in the construction and services sectors, and a dramatic rebound in confidence in the agriculture sector despite drought, as dairy auction prices picked up sharply.

‘‘Sentiment remains extremely positive, with firms ready to deliver higher activity, employment and investment – consistent with the economic expansion rolling on at a hefty clip,’’ ANZ chief economist Cameron Bagrie said.

‘‘In cricketing parlance, New Zealand’s innings is progressing nicely; there are runs on the board – we are into the fifth year of an economic expansion with depth down the order.

‘‘The economy is not knocking the ball out of the park; we’re nudging ones and twos but accumulating nicely.’’

To be fair, the boundaries were a little shorter at this time of the year, Bagrie said, with confidence tending to lift in February usually.

Stripping out the seasonal pattern, headline confidence and firms own activity were down slightly and employment intentions unchanged from the end of last year. But the overall picture was still a solid start to the new year.

‘‘New Zealand has good reason to celebrate. We are one of a select few countries that have managed to improve their balance sheet, paying down debt, while still achieving sufficient growth to put people into jobs.’’

Services and construction firms were the most upbeat sectors.

That was despite latest building figures out yesterday showing a drop in housing consents in January, down more than 7 per cent excluding apartments, after a dip in December. But given the ANZ survey results for construction confidence, the consent figures may just be a blip, BNZ economists said.

Agriculture showed a sharp lift in confidence in the ANZ survey, helped by higher dairy auction prices, despite the drought declared in parts of the South Island earlier this month.

‘‘Higher dairy prices are no doubt working their magic,’’ Bagrie said, and the bounce-back was welcome.

The survey also showed year ahead inflation expectations down to just 1.7 per cent, from 2.13 per cent in the previous survey. That equalled the record low in inflation expectations seen in the middle of 1999, with all subsectors below the Reserve Bank’s mid-point target of 2 per cent.

However, pricing intentions rose slightly, with a net 23 per cent of firms planning to raise prices. But ANZ said the level remained ‘‘tame’’.

Westpac Bank economists said the survey showed price pressures remained in check, so the Reserve Bank could afford to leave interest rates on hold ‘‘for quite some time yet’’.

Interest rate expectations also remain low. But the tricky ‘‘googly’’ for the economy was the still high New Zealand dollar, with export intentions down, ANZ said.