28 May 2014
NZ business confidence on the slide
FXStreet (Bali) - New Zealand business confidence fell sharply in May, coming at 53.5% vs 64.8% in April, while NZ Activity Outlook stood at 51.0% vs 52.5% last month.
Key Quotes from Cameron Bagrie, Chief Economist at ANZ
"Optimists continue to massively dwarf pessimists but we’re on the slide. A net 54% of firms are optimistic about general prospects; that’s incredibly healthy by historical norms. However, this month’s reading is down 11 points on the month prior and 17 points from February’s peak. Our seasonally adjusted estimate dropped 15 points in the month, with confidence down in all sub-sectors."
"The finger can be pointed at a few obvious catalysts: higher interest rates; falling commodity prices (dairy at least); a levelling out in the housing market; a high NZ dollar despite commodity prices easing; and at the risk of drawing a long bow, political fracas."
"But the glass is still at least half full. Interest rates are still low (though a net 89% expect them to keep rising); dairy prices – at around USD3,900/tonne for whole milk powder – are still historically high; and a levelling out in housing activity is a net positive. Migration is surging, and employment growth is very strong. While it is tempting to focus on the fall in confidence and the likely reasons for it, the level of confidence is still very high, and for good reasons. Put another way: the question asked is whether business conditions are going to improve. They are pretty darn good now. More people are simply saying this may be as good as it gets – and they may well be right."
Key Quotes from Cameron Bagrie, Chief Economist at ANZ
"Optimists continue to massively dwarf pessimists but we’re on the slide. A net 54% of firms are optimistic about general prospects; that’s incredibly healthy by historical norms. However, this month’s reading is down 11 points on the month prior and 17 points from February’s peak. Our seasonally adjusted estimate dropped 15 points in the month, with confidence down in all sub-sectors."
"The finger can be pointed at a few obvious catalysts: higher interest rates; falling commodity prices (dairy at least); a levelling out in the housing market; a high NZ dollar despite commodity prices easing; and at the risk of drawing a long bow, political fracas."
"But the glass is still at least half full. Interest rates are still low (though a net 89% expect them to keep rising); dairy prices – at around USD3,900/tonne for whole milk powder – are still historically high; and a levelling out in housing activity is a net positive. Migration is surging, and employment growth is very strong. While it is tempting to focus on the fall in confidence and the likely reasons for it, the level of confidence is still very high, and for good reasons. Put another way: the question asked is whether business conditions are going to improve. They are pretty darn good now. More people are simply saying this may be as good as it gets – and they may well be right."