Business confidence softens but other indicators up

Business confidence softened for a third successive month but employment intentions and profit expectations are up, according to the December National Bank Business Outlook survey.

Exporting intentions were resilient in the face of the high New Zealand dollar with net 26 per cent of respondents expecting to export more in the year ahead.

Overall, a net 39 per cent of firms expect better times ahead, down four percentage points on November's reading.

National Bank said the general spirit of the remainder of the December survey was one of improvement.

A net 37 per cent of firms expect better times for their own business during the year ahead, up three percentage points from the previous survey.

A net 16 per cent of businesses expect higher profits over the year ahead, which is the highest

reading since early 2002. A net six per cent expect to hire staff in the year ahead.

The survey's authors said the scene was set for a respectable upswing across the economy but uncertainty remained as to how much improvement would result from the so-called feelgood factor.

"For firms to commit to hiring and investing, they need to see a sustained pick up in demand," National Bank said.

Any pick up in the economy also raised the issue of inflation.

While inflation expectations eased slightly in the December survey, pricing intentions nudged higher. A net 18 per cent expect to be pushing up prices over the coming year.

"This is still low but the trend has been rising for three months," National Bank said.

- NZPA