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Business confidence falls further – New Zealand dollar drops

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Business confidence falls further – New Zealand dollar drops

Corporate confidence fell in August, according to the latest ANZ Outlook poll.

But in what may provide some comfort to the government, the views of companies regarding their own activity have remained constant.

“In August, business confidence in ANZ’s forecasts fell by another five points to 50 per cent of respondents who said they expected deteriorating general working conditions next year,” said ANZ chief economist Sharon Zuliner.

“It is rare for this series to be negative, and if this weakness continues, it will not bode well for GDP growth at the end of the year.”

Employment intentions dropped 8 points to -6 per cent. There were no positive sectors.

“This indicates weaker employment growth in the coming months, consistent with stability rather than improving labor market,” she said.

In July, the survey showed confidence fell to levels we have not seen since the global financial crisis in 2008.

This contributed to the revision of forecasts by many economists – including the Reserve Bank.

Zollner pointed out that corporate perceptions of their own prospects are “a much better measure of actual economic results.”

It stabilized in August, with 4 per cent expecting improvement – although this was well below the long-term average of 27 per cent.

The New Zealand dollar fell about a quarter of a US cent to $ 66.80 after the report was released at 1:00 a.m.

Zollner also acknowledged the political debate over the importance of confidence surveys.

In an important speech on the issue this week, Prime Minister Jacinda Ardirn acknowledged the sharp slowdown in business confidence, but said business expectations were not linked to GDP performance.

“We have been looking closely at the data,” Zollner said. “What is clear is that demand from companies about their real intentions has more accurate indicators of future GDP growth than their forecast demand.”

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