Business confidence lifted another 8 points. Photo / 123RF
Business confidence lifted another 8 points. Photo / 123RF
The optimists increasingly out number the pessimists in the latest ANZ Business Outlook survey - the first full survey since the election.
Business confidence lifted another 8 points to +31 in the results for November. Firms’ expected own activity rose 3 points to +26.
A positive figure indicates more optimiststhan pessimists (on a net basis).
“For much of the sample this is their first survey response since the election,” said ANZ chief economist Sharon Zollner.
Although she noted that “political uncertainty persisted through the month to the extent that only a tiny number of responses came in after the coalition agreements were announced.”
“The fall in economy-wide pricing intentions has stalled, but they continue to trend lower for retailers,” Zollner said.
Manufacturers were an outlier in the survey, with a fall across most activity indicators, whereas the agriculture and construction sectors were decidedly cheerier.
“We’d characterise this month’s Business Outlook survey as corroborating the narrative that the soft landing is in play, “ Zollner said.
“But that the question of whether the slowdown will be sufficient to bring inflation all the way back to target in an acceptable time frame remains an open question.”
“Markets are itching to price in imminent cuts to the Official Cash Rate, but with some inflation indicators threatening to stall and activity indicators generally far from recessionary levels, it seems likely to be some time before the Reserve Bank is seeing the world the same way.”
Inflation expectations eased from 4.94 per cent to 4.79 per cent.
“The downward trend remains firmly in place,” Zollner said.
Retailers’ pricing intentions eased from 61 per cent to 46 per cent of firms intending to raise their prices in the next three months
But moves in other sectors were much more mixed.
Economy-wide, the proportion of firms intending to raise their prices has been flattish for the past five months, which is threatening to look like a stall.
“The same is true of the numerical estimates of how much firms intend to raise their prices in the next three months. These were unchanged at 2.1 per cent.
ANZ chief economist Sharon Zollner. Photo / Dean Purcell
But again, more encouragingly for the RBNZ, there was a sharp fall in the retail sector from 3.1 per cent to 2 per cent, and the downward trend here looks well intact.
The proportion of firms reporting that they had lifted wages in the past 12 months ticked up from 73.3 per cent to 76.2 per cent, and the magnitude of reported past wage increases also rose, ticking back up above 5 per cent.
But the proportion of firms expecting to raise wages in the next 12 months fell 4 points to 77 per cent, led by falls in retail, manufacturing and services.
The estimated expected average wage increases over the next 12 months fell from 4 per cent to 3.6 per cent., with retail the lowest at 3 per cent.
These results may be related to anticipated policy change around industry-wide pay agreements and minimum wages.
Westpac senior economist Satish Ranchhod sounded a note of cautious about the results.
“In large part, the rise in confidence reflects the changes in New Zealand’s political landscape,” he said.
“Historically, the ANZBO survey has tended to be much stronger when New Zealand has centre-right governments (whose policies tend to be more business-friendly). Confidence is now back around the levels we saw during the last time New Zealand had a centre-right government.”
However, while business confidence was up, the survey pointed to a more sobering picture of economic activity.
“Most businesses (a net 12.5 per cent) actually reported that trading activity has slowed over the past year. There’s been particular weakness in the manufacturing and construction sectors. That’s consistent with the feedback we’ve also received from businesses around the country and matches our expectations for a downturn in growth through the latter part of this year.”
