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Business confidence picks up

decreasing business graphThe latest business confidence survey showed a modest pick-up in business sentiment, though it remains low, ANZ’s Business Outlook Survey revealed.

Sentiment is very weak in the agricultural sector, and is also low in the manufacturing and retail sectors. In contrast, businesses in the construction and service sectors are more upbeat.

“There are, however, marked divergences across the economy,” said Satish Ranchhod, Westpac senior economist.

While many businesses remain apprehensive about the economic environment in general, they are more upbeat about their own economic prospects. The survey showed that most businesses’ expectations for activity in their own firms actually picked up to 32.1 per cent, from 29.4 per cent last month, with confidence at solid levels in all sectors except agriculture.

“Businesses’ activity expectations are consistent with our forecast for moderate, albeit it uneven, growth over 2016,” said Ranchhod.

According to the survey, the pricing components emphasised that inflationary pressures in the economy remain very subdued. Expectations for inflation over the coming year nudged up slightly to 1.42 per cent.

“That’s just above the record lows reached last month, but the RBNZ may take some comfort from the fact that expectations haven’t declined further,” Ranchhod said.

However, while inflation expectations remain stable, the number of businesses planning on increasing prices actually pushed down this month, from levels that were already low.

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