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NZ business confidence slips in February

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New Zealand business confidence slipped in February while remaining relatively optimistic, as the country’s pace of economic growth starts hitting a “mature stage” where it becomes harder to keep hitting new highs.

A net 16.6 per cent of firms are optimistic about the general outlook for the economy, down from 21.7 per cent in December, according to the ANZ Business Outlook.

A net 37.2 per cent see their own activity expanding in the year ahead, down from 39.6 per cent, and still north of the 28 per cent long-run average.

Record levels of tourism and population growth have helped fuel consumer spending over the past year and coincided with a major construction boom, helping drive New Zealand’s economic growth and offsetting a period of tepid inflation that’s kept price increases off the table, leaning on firms’ profitability.

ANZ Bank New Zealand economist Cameron Bagrie said the survey of 416 firms showed economic indicators were still “well above average” and indicated more of a levelling out in the pace of growth rather than signalling a downturn.

“The economy is moving further into a mature stage of the economic expansion,” Bagrie said.

“When things already look pretty darn good (which they have been of late for most New Zealand businesses), it’s harder to eke out incremental gains.”

The survey showed a net 22.3 per cent of firms intended to boost their investment in the coming year, down from 25.2 per cent and still the second highest reading in two years, while a net 24.2 per cent wanted to hire staff compared to 25.5 per cent in December.

A net 23.7 per cent see increased profitability compared to 31 per cent in December, and pricing intentions were unchanged with 25.6 per cent wanting to increase prices this year.

Meanwhile, the latest BNZ and Marketview monthly report on New Zealand’s Online Retail Sales showed total online retail spending by New Zealanders in January was up 16 per cent compared to the previous January.

The annual spend level, across the retail categories monitored is now estimated to be $3.8 billion (excl GST). This is equivalent to 7.4 per cent of total retail sales for the same period, as reported in Statistics New Zealand’s RTS (comparing like-for-like categories).

Excluding the food and liquor sectors from both the RTS and our Index, BNZ estimated online spending to be equivalent to around 10.8 per cent of retail sales.

Purchases from offshore online retailers were up 15 per cent on the previous January. Spending at local sites was up 17 per cent on January last year.

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