Business confidence rises to near 15-year high

A surge in sentiment among retailers and a happier agricultural sector has led to NZ business confidence increasing to a near 15-year high this month. Photo / Sarah Bicknell

New Zealand business confidence rose to near a 15-year high this month, led by a surge in sentiment among retailers and a happier agricultural sector. Expectations for hiring, investments, activity and pricing all rose.

A net 60.5 percent of firms expect general business conditions to improve in the year ahead, up from 53.2 percent last month, according to the ANZ Business Outlook survey. Firms seeing a pickup in their own business activity in the year ahead held unchanged at 47.1 percent.

ANZ's composite indicator of business and consumer confidence is indicating potential for annual economic growth to accelerate to 5 percent by mid-2014. ANZ chief economist Cameron Bagrie said that was 'pie-in-the-sky stuff though "we agree with the spirit of strong growth ahead."

With the peak Christmas-New Year spending season looming into view, retailers emerged as the most confident group this month, with a net 69.5 percent upbeat about the year ahead, up from 48 percent in October.

In agriculture, which is the laggard in the survey, confidence rose to 51.2 percent from 46.3 percent and their view of their own activity improved to a still-weak 39.1 percent from 23.8 percent.

Agriculture was overtaken by construction, with general confidence rebounding to 60 percent from 40.7 percent, which its own activity measure of confidence rose to 45.7 percent from 44.5 percent.

Manufacturing improved to 52.7 percent with an own activity reading of 48.6 percent and services remained bullish at 64.6 percent being upbeat about the general economy, from 64.5 percent a month earlier, while own activity fell to 49.4 percent from 52 percent.

Profit expectations improved to 37.3 percent from 28.9 percent and a net 25.3 percent of firms expect to raise prices in the coming year, up from 22 percent in October.

Export intentions rose to 30.8 percent from 26.9 percent while investment intentions improved to 22.3 percent from 18.8 percent.

Inflation expectations edged up to 2.43 percent from 2.38 percent and hiring intentions climbed to 23 percent from 18.7 percent.