Business confidence extends slide as rates rises bite

Photo / Doug Sherring
Photo / Doug Sherring

New Zealand business confidence extended its slide from a 20-year high, while remaining at elevated levels, amid expectations the central bank will continue to hike interest rates to quell inflation in an accelerating economy.

A net 64.8 percent of firms are optimistic about general business conditions this month, down from 67.3 percent in last month's survey and 70.8 percent in February, which was the highest since March 1994, according to the ANZ Business Outlook survey.

Confidence exceeded a net 50 percent in four of the five industry sectors surveyed, while agriculture slipped back to 42.9 percent from 52.8 percent, which may in part be driven by a drop in prices for global dairy products.

Retail was the most bullish for a second month, with a net 71.1 percent optimistic about general business conditions, up from 70.8 percent in last month's survey. Services edged up to 68.5 percent from 68.2 percent, construction improved to 65.4 percent from 63.2 percent and manufacturing rose to 61.3 percent from 55.8 percent.

"The economy remains 'in the groove' with elevated levels of confidence," said Cameron Bagrie, chief economist at ANZ. "With the economy firmly into an expansion and interest rates on the ascent, the challenge remains to settle into the glide-path of a durable and sustainable upswing."

A net 86.3 percent of those polled expect interest rates to rise further, up from 85.7 percent last month. Yet pricing intentions didn't budge from last month's 30.2 percent expecting a lift and inflation expectations eased back to 2.59 percent from 2.61 percent.

Firms' own activity outlook eased back to a net 52.5 percent from 58.2 percent and investment intentions fell to 29.5 percent from 30.7 percent.

Those expecting to take on workers rose to a net 29.8 percent from 26.6 percent while those seeing higher profits ahead slipped to 35.7 percent from 40.1 percent.

Exports remained resilient, with a net 34 percent expecting to increase exports, up from 32.3 percent a month ago.

- BusinessDesk

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