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Current as of 30/10/14 07:40PM NZST

Brian Fallow

The Economics Editor of the NZ Herald

Companies feel Xmas cheer

Confidence survey discovers rising optimism on activity and the economy.

Some exporters expect a better year, but the high value of the dollar is a problem. Photo / Alan Gibson
Some exporters expect a better year, but the high value of the dollar is a problem. Photo / Alan Gibson

Businesses are more confident about their own outlook and the broader economy, ANZ's monthly survey has found.

A net 32 per cent expect their own activity to increase over the year ahead, up from a net 26 per cent last month, while a net 26 per cent expect general business conditions to improve, up from 17 per cent last time.

"We normally feel perkier heading into the festive season," ANZ chief economist Cameron Bagrie said, "though stripping out the mild seasonal pattern still shows a modest lift."

He attributed the rise in confidence to a combination of increasing activity in the housing market, rising commodity prices, a rising sharemarket, global ructions remaining in recess, and reduced wage pressure which bodes well for a long period of low interest rates.

"Conversely, unemployment is on the up, the New Zealand dollar is still elevated, we're still a nation of poor savers, and reduced wage pressure unfortunately also means lower disposable incomes," he added.

Most of the survey indicators, including investment and hiring intentions and profit expectations, improved.

A net 17 per cent of firms expect to increase their prices over the next three months. While that was up from a net 15 per cent last month, the level remained timid, he said.

Inflation expectations were at their lowest for 13 years.

A net 18 per cent of exporters expect to export more over the year ahead. That is up from a net 14 per cent last month but still low.

"Exporters clearly continue to suffer from a high currency."

The Reserve Bank and inflation targeting were becoming a scapegoat for exporters' currency woes, but realigning the New Zealand dollar with local competitiveness and fundamentals must come from lifting the latter two, Bagrie said.

"Alas, this is where the main act is becoming the fringe festival to politics. Mt Tongariro is not the only thing belching hot air."


The figures:

* A net 32 per cent of businesses expect their activity to increase over the next year.

* A net 26 per cent expect general business conditions to improve.

* A net 17 per cent expect to raise prices over the next three months.

* A net 18 per cent of exporters expect to export more over the next year.

- NZ Herald

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