Business confidence ticked up slightly this week, capping off a series of positive economic stories for the Government, but the future is still murky, Thomas Coughlan reports.
ANZ’s business confidence survey showed headline confidence appear to halt its year-long decline yesterday, ticking up 12 points in September, although a net 38 percent of firms still have a negative economic outlook.
Firms’ outlook for their own activity, which correlates far better with economic growth, also rose. It was up 4 points with a net 8 percent of firms expecting their own activity to improve over the next year.
Finance Minister Grant Robertson was pleased with the results, but cautious – saying it was just one survey and he would “wait and see if a trend emerges”.
Trade Minister David Parker has previously labelled the surveys “junk”, and Robertson has noted that GDP has a greater correlation to points scored in Crusaders rugby games than the ANZ Business Outlook survey of headline confidence.
But Robertson said recent economic news should give people optimism. This included better than expected GDP figures, which showed the economy grew 1 percent last quarter, and Moody’s reaffirmation of New Zealand’s Aaa rating.
Robertson used the more buoyant mood to make a speech during Parliament’s general debate on Wednesday. Although he pointedly did not not mention business confidence directly, he talked up the Government’s economic record, saying 15 of 16 industries saw growth last quarter, and noted Moody’s positive outlook for the New Zealand economy.
But investment intentions fell
But Opposition finance spokesperson Amy Adams noted confidence was still near levels not seen since 2009. She also pointed to investment and hiring intentions, which remain low.
The survey found a net 9 percent of firms were expecting to reduce investment, down more than four percentage points from the previous month. Employment intentions lifted by five points, but were still low at -1 percent expecting to hire more staff.
Profit intentions were also up, defying a recent slump. Both the ANZ Business Outlook Survey and NZIER’s QSBO survey have recorded slumping profit intentions. The trend has been put down to concerns from businesses that rising costs and a higher wage bill as a result of Government minimum wage increases would impact profitability.
ANZ survey recorded profit expectations lift by 4 points, but remained negative at -13 percent. Retail, the sector hardest hit by minimum wage increases, was the most negative at -35 percent, down 8 percent from the previous month.