NZ businesses still optimistic as building work buoys mood

Special Housing Area still in the build process in the Waimahia Inlet in Weymouth, Auckland. Photo / File

New Zealand business confidence rose a tad in December, led by an upbeat construction sector although tighter credit conditions continued to weigh.

A net 21.7 per cent of firms were optimistic about the general outlook for the economy in December, up from 20.5 per cent of firms a month earlier, the ANZ Business Outlook survey shows. A net 39.6 per cent saw their own activity expanding versus 37.6 in November.

"The construction sector is the most optimistic and manufacturing the least, but all sectors sit on the positive side of the ledger," said ANZ Bank New Zealand chief economist Cameron Bagrie.

New Zealand's economy has been growing at a rapid clip as strong tourism and record migration underpin consumer spending, while a housing shortage and the Canterbury rebuild has supported building activity.

However, 32.1 per cent of firms found it tougher to access credit, versus 22.4 per cent in November, with agriculture and services finding it the hardest. It was the lowest reading since the question was first asked in 2009 and is across all sectors, Bagrie said.

"Despite the tightening in this area, it's encouraging to see firms remain so upbeat about their broader economic prospects," he added.

A net 31 per cent of firms expect to be more profitable in the coming year, up from 29.4 per cent a month earlier, and a net 25.6 per cent want to raise prices, up from 20.8 per cent in November.

Bagrie noted that there is now a widespread expectation that interest rates will be moving up, with 54 per cent of firms now expecting rate increases versus 18.2 per cent in November. Inflation expectations were at 1.60 versus 1.49 in the prior survey.