Business confidence at 15-month low

BNZ chief economist Tony Alexander said the Kiwi economy had still not gathered sustained upward momentum. Photo / Supplied

Worries over the European debt situation have seen New Zealand business confidence slump to a 15-month low, according to the latest survey.

BNZ's Confidence Survey, carried out last week, shows a return of pessimism regarding prospects for the New Zealand economy.

A net 5 per cent of 243 respondents said they expected the economy to be in worse shape in 12 months' time.

That figure comes from 28.8 per cent saying they think it will be in better shape, 37.9 per cent in the same shape, and 33.3 per cent in worse shape.

Last month, a net 22 per cent of 288 respondents expected things to get better and in April a net 34 per cent of 405 respondents expected things to improve.

It is the poorest level of sentiment since March 2011 when a net 20.8 per cent expected things to get worse.

BNZ chief economist Tony Alexander said this month's result again suggested the Kiwi economy had still not gathered sustained upward momentum since exiting the recession in 2009.

There were two main reasons for the fall in confidence, Alexander said.

"Firstly, a deterioration in the situation in Europe. And secondly, the pull-back we have seen in price of commodities."

Farmers had become more cautious about export prices in the coming season and businesses selling to farmers were reporting budget restraints, he said.

One North Waikato dairy farmer said negative outlook for the season was due to commodity prices.

"A lot of salespeople (have been) knocking on our door trying to sell their wares. I get the impression competition is tough out there with many competing for the farmers dollar," the farmer said in a survey reponse.

"If you are a few days late paying an account you get a friendly phone call. Cash flow must be tight."

Construction was improving, as were recruitment, and printing and packaging, but retailing remained a weak sector.

Residential real estate remained strong with good numbers of buyers but few listings on average.