Businesses close out year upbeat

Business confidence ends 2015 at an eight-month high as growth prospects remain solid. Photo / Getty

New Zealand businesses ended 2015 on an upbeat note, with confidence rising to the highest level since April as recent data points to robust growth in the year ahead.

A net 23 per cent of firms were optimistic about the general outlook for the economy in 2016, rising from a net 14.6 per cent a month earlier, according to the ANZ Business Outlook survey of 432 companies.

The agricultural sector showed more optimists than pessimists for the first time since March at 7.5 per cent, and they scaled back intentions to reduce livestock investment to a net 11.7 per cent from 18.7 per cent in November.

On companies' own activity, a net 34.4 per cent expect to see growth, up from 32 per cent in November, and a net 17.7 per cent see bigger profitability in the coming year, compared to 14.9 per cent. Firms reduced their export expectations to a net 19.3 per cent from 22.8 per cent in November.

"The economic bears no longer have the upper paw; there is no denying an improvement in the growth stakes," ANZ Bank New Zealand chief economist Cameron Bagrie said in his report.

"New Zealand sits in the right part of the world, sells the right stuff, has an abundance of natural resources, a strong brand, is well-liked globally and has huge free trade access."

The confidence survey comes a day after government figures showed the economy grew 0.9 per cent in the September quarter, beating estimates, as an influx of tourists fuelled services sector activity.

Bagrie said one of the biggest issues facing the economy was how New Zealand latches on to its opportunities, rather than the broader macro-economic risks around them.

Today's survey showed investment intentions were largely unmoved at a net 14.9 per cent expected to spend more in the coming year, though employment intentions rose to 20.1 per cent form 13.5 per cent.

Residential construction activity is expected to grow by a net 32 per cent of firms, up from 23.1 per cent in November, while commercial construction intentions rose to 45.4 per cent from 37.5 per cent.

Pricing intentions edged up to a net 23.6 per cent expecting to raise them in the coming year from a net 22.2 per cent in November, though that was boosted by retailers, with a net 41.1 per cent intending to hike.

Inflation expectations were unchanged at 1.64 per cent, and a net 32.8 per cent see interest rates falling in the coming year compared to 23.8 per cent a month earlier. A net 13.5 percent expect easier access to credit, from 6.8 per cent in November.