NZ business confidence levels out

Robert Smith | Wednesday October 28 2009 – 03:50pm

Source: The National Business Review

An easing in confidence in the service, retail and manufacturing sectors has seen overall business confidence in October drop 1% from September to 48%, after reaching levels not seen in a decade last month.

The latest Business Outlook report from the National Bank shows the construction industry is the most confident, with 75% of businesses surveyed predicting better times ahead in that sector.

Looking at their own performance, 31% New Zealand businesses are predicting a stronger result in the future, also down 1% on the September figure.

The October result follows a massive jump in confidence last month, when overall confidence jumped from 34% to 49%, with the latest result showing confidence stabilising at elevated levels.

Profit expectations are also on the rise, with 12% expecting a better bottom line over the coming year – the highest reading in five years, according to the bank.

Investment intentions were also up 4%, but employment intentions dropped another 2%, indicating a lack of conviction when it comes to committing cash to employment and investment as firms focus on balance sheet consolidation and de-leveraging.

The report noted that with momentum improving across the economy it was “inevitable that interest rates will rise from the extraordinarily low levels they currently reside”, although it also conceded that the degree to which it occurs and its timing remained subject to debate.