New Zealand business confidence slipped from a five-year high in October, while remaining at an elevated level, with firms more bullish about exports and slightly less so on profits and lifting prices.
A net 53 per cent of firms expect general business conditions to improve in the year ahead, down from 54.1 per cent in September, which was the highest since March 1999, according to the ANZ Business Outlook survey. Firms seeing a pickup in their own business activity in the year ahead rose to a net 47 per cent from 45 per cent.
Signs are that the economy may be picking up pace. The Reserve Bank today said it estimated the economy grew more than 3 per cent in the year to September 30, having projected 3 per cent growth in its last statement six weeks ago. The Quarterly Survey of Business Opinion from the New Zealand Institute of Economic Research had business confidence at the highest in three years in the third quarter.
"The New Zealand economy is in a sweet spot," said ANZ New Zealand chief economist Cameron Bagrie. "While we remain at the mercy of global forces to a degree, localised specifics - housing shortages, a city rebuild, booming dairy prices, a turnaround in job prospects encouraging less emigration - are delivering considerable pep."
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The construction sector's optimism fell this month, with just 40.7 per cent seeing better general business conditions in the year ahead, down from 68.2 per cent in September. That relegates construction to the least optimistic of five sectors from the most optimistic last month.
Construction firms' own activity outlook improved to 44.5 per cent from 41 per cent. The survey shows the drop was driven by commercial construction intentions, which fell to 23.8 per cent from 35 per cent, while residential remained at about 47 per cent.
By contrast, the services sector became more bullish, with 64.5 per cent seeing a general improvement in the economy, though their own activity outlook slipped to 52 per cent from 53.8 per cent.
Agriculture, which had been the laggard in the survey, is now more optimistic than manufacturing or construction, with a net 46.3 per cent seeing a general improvement in the economy, though own activity remained weak at 23.8 per cent seeing a pickup.
Profit expectations in total fell back to 28.9 per cent seeing a pickup, from 33.5 per cent in last month's survey. A net 22 per cent of firms expect to raise prices in the coming year, down from29.9 per cent in September.
Export intentions rose to 26.9 per cent from 23.2 per cent while investment intentions dimmed to 18.8 per cent from 20.4 per cent.
Inflation expectations edged up to 2.38 per cent from 2.31 per cent and hiring intentions were little changed at 18.7 per cent.