Business confidence increasing
Business confidence continues to recover with a net 40 per cent of firms expecting a better general economic outlook over the coming months, according to the latest New Zealand Institute of Economic Research (NZIER) study.
The Quarterly Survey of Business Opinion says the seasonally adjusted figure was a marked increase from the net 14 per cent feeling positive in the previous quarter.
However, when it comes to firms’ own domestic trading activity, a net one per cent reported a decline in activity over the September quarter on a seasonally adjusted basis.
Christina Leung, deputy chief executive, adds: “The increase in optimism in the September quarter occurred despite renewed conflicts between the US and Iran, which have pushed global oil prices higher again.
“While the impact of developments in the Middle East on sentiment appears muted for now, ongoing uncertainties over geopolitical conditions and global oil supply remain a headwind for New Zealand’s economic recovery over the coming year.”
She notes expectations of a recovery in demand have supported a turnaround in the investment intentions of companies, with firms planning to invest in buildings, plant and machinery over the coming year.
When it comes to hiring, a net five per cent of firms reported they had cut employee numbers in the September quarter, but a sizeable proportion intend to increase staff numbers in the next quarter.
The survey shows a lack of demand remained the primary constraint for firms in the September quarter.
Meanwhile, firms continued to report that it was more difficult to hire skilled workers in the September quarter, while only a small proportion said it was easier to find unskilled workers.
“Confidence lifted across all sectors surveyed, with the retail sector feeling particularly upbeat,” says Leung.
“A net 57 per cent of retailers surveyed expect better general economic conditions over the coming months. This positive sentiment was despite declines in new orders and sales in the September quarter.
“Cost pressures remained intense for the retail sector, but weak demand meant retailers were unable to fully pass on higher costs by raising prices.
“These factors drove a deterioration in the retail sector’s profitability in the September quarter.”
The building sector delivered a sharp turnaround in sentiment in the September quarter, with a net 46 per cent of such firms expecting an improved general economic outlook over the coming months, in contrast to their pessimism earlier this year.
