KEY POINTS:
Business confidence has improved in the August National Bank Business Outlook survey released today.
The number of those surveyed who expect things to get worse over the year ahead has fallen, with 20.5 per cent optimistic, compared to the 43.2 per cent in the last survey.
A net 4.7 per cent expect conditions for their own business to improve in the coming year whereas in the survey last month a net 8.2 per cent expected conditions for their own business to worsen over the coming year.
"The economic patient is starting to show signs of life," National Bank chief economist Cameron Bagrie said.
With a net 63 per cent expecting lower interest rates ahead - the highest read since late 1996 - the July reduction in the Official Cash Rate and expectations of more appeared to have had an immediate positive influence, he said.
"We cannot stress the importance of confidence enough. It's not the key driver of wealth, but is critical for maintaining momentum," he said.
Bagrie said there was a risk that caution among business people would be self-fulfilling.
"Improving confidence is the first critical step in seeing that spiral broken and help mitigate extreme swings in the cycle," he said.
- NZPA
