Business confidence strongest in over a year

Positive outlook and export intentions encouraging signs for NZ economy. Photo / Martin Sykes

Business confidence consolidated at respectable levels in the National Bank's June survey.

A net 47 per cent of respondents expect general business conditions to improve over the next 12 months, the strongest reading for more than a year.

Other indicators from the survey, which are based on firms' views of their prospects and are generally a more reliable guide, were similar to May. A net 39 per cent expect higher activity for their own business over the year ahead, down one point on May.

Profit expectations eased three points to a net 20 per cent expecting improvement but remain well above the long-run average of 7 per cent.

Employment intentions fell three points, but with a net 10 per cent of businesses expecting to lift staff levels over the year ahead this indicator remains higher than it has been for most of the past two years.

The bank's chief economist, Cameron Bagrie, said other labour market indicators, such as job advertisements and numbers on the unemployment benefit, were showing a gradual improvement.

Investment intentions were unchanged.

But export intentions lifted three points, with a net 31 per cent of firms expecting to export more over the year ahead. This was particularly encouraging given the giddy peaks the New Zealand dollar had reached against the US dollar when most survey responses were rolling in, Bagrie said.

"The fact that New Zealand business confidence has held up around these levels is pretty encouraging. I think there is some real substance there. It's not like mid-2010 [when business sentiment failed to signal imminent weakness in the economic cycle]."

At the regional level, the strongest gains in firms' own activity expectations were in Northland, Waikato, Hawkes Bay, Taranaki, Otago and Southland. A net 27 per cent of firms expect to raise their prices over the year ahead, down from a net 34 per cent in the May survey.