NZ Herald business editor at large

Liam Dann: Optimists winning again

Photo / iStock
Photo / iStock

The optimists are winning again. In last months of 2015 New Zealand business shrugged off the dairy downturn according to the latest Quarterly Survey of Business Opinion.

The NZIER report, released today, is the first to show sentiment shifting in a positive direction for more than a year and is stronger than the market had expected.

After some big slumps through last year the result is a very good sign. It is an early indication that the economy has been robust enough to weather a dramatic commodity slump without the wheels falling off completely.

Current market turmoil aside things look good for solid growth through 2016.
One of the biggest worries - drought - looks like it may have been avoided in key areas such as the Waikato and Taranaki (touch wood).

China's slow down and the deflationary effects of further falls in oil remain the biggest concerns right now.

They have have the NZIER picking official interest rates will stay at record lows of 2.5 per cent for the rest of the year.

Banks economists at Westpac and ASB are still picking the Reserve Bank will have to cut rates twice more this year, although this view is based less on expectation of an economic slump and more to do with a belief that there has been a structural shift in the nature of inflation.

That's a view for which the Reserve Bank is yet to show much support although the latest oil price slumps will no doubt add weight to the case.

The survey polled 974 businesses on their outlook, trading conditions, hiring and pricing intentions in the last quarter of 2014.

It also found the ability for business to raise prices were lifting slightly but remain subdued by historical standards when the sharp fall in the kiwi dollar was factored in.

A net 18 per cent of businesses reported improved trading and a net 17 per cent added staff during the period.

- NZ Herald

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NZ Herald business editor at large

Liam Dann is business editor at large at the New Zealand Herald. He has been a journalist for 20 years, covering business for the last 14 of them. He has also worked in the banking sector in London and travelled extensively. His passion is for Markets and Economics, because they are the engine of the New Zealand economy. He hosts The Economy Hub video show every Thursday.

Read more by Liam Dann

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