New Zealand business confidence fell in November as pessimistic manufacturers offset upbeat farmers, construction firms and service companies.

A net 20.5 percent of firms were optimistic about the general outlook for the economy in November, down from 24.5 percent of firms a month earlier, the ANZ Business Outlook shows. A net 37.6 percent saw their own activity expanding, just down from 38.4 percent in October.

The second drop in confidence in as many months wasn't enough to suggest the economy is on anything but an upbeat trend, given the stronger own-activity measure, strong employment intentions and the outlook for profits, with 29 percent of firms surveyed expecting to increase earnings in the year ahead, just below October's reading of 30 percent. Those planning to increase prices rose to a net 20.8 percent from 17.6 percent, while inflation expectations rose to 1.49 percent from 1.44 percent.

All sectors reported that it was getting more difficult to get credit, with 22 percent of respondents reporting "sand in the gears." It's the highest figure since the survey started asking about credit in 2009.


"It is midnight at the beach bar and the RBNZ is playing bouncer (via LVR) and banks the responsible bartenders," ANZ Bank New Zealand chief economist Cameron Bagrie said in a note. "Drinks are now being rationed and that's a good thing. New Zealand's history is littered with boom-bust cycles, and credit sits at the centre of such dynamics."

Residential and commercial building intentions eased lower, although the construction sector led employment intentions. More firms expect the unemployment rate to fall further.

Bagrie said the economy was still riding a wave of "historically low interest rates, solid confidence, improving commodity prices and an exchange rate that's taken a quick dip."
Most of the survey responses were received before the Kaikoura earthquake on Nov 14.