Tony Alexander: BNZ’s Confidence Quarterly Survey For 2016 Is Released

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At the negative end understandably is the dairy sector with high pessimism . At the other end of the spectrum are regional housing markets now benefitting from Aucklanders seeking assets and locals jumping on this cyclical bandwagon, and tourism.

MIL OSI – Source: BNZ Economist Tony Alexander – Analysis:

Our first quarterly BNZ Confidence Survey for 2016 has unsurprisingly shown that the dairying sector is extremely pessimistic and experiencing hard times while record optimism prevails in tourism where visitor numbers and spending are booming. The weakness in dairying is starting to spread out but construction around the country is very strong, regional housing markets are lifting, and in Auckland while real estate comments are highly mixed it is interesting to note some respondents observing more Chinese buyers recently.

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Dairy Woe But Tourism & Construction Booms Underway

Our first quarterly survey for 2016 in which we ask Weekly Overview readers to comment on their sectors has produced some stark results. At the negative end understandably is the dairy sector with high pessimism and also some reduced confidence in sheep and beef. However in horticulture sentiment is very positive.

At the other end of the spectrum are regional housing markets now benefitting from Aucklanders seeking assets and locals jumping on this cyclical bandwagon, and tourism. Strong growth in visitor numbers and their spending has produced the most positive set of comments on tourism or potentially any sector that we have seen in the 11 year history of this survey. The construction and engineering sectors are also very buoyant and forestry positive. Retailing is also generally though not completely positive and with margins under pressure.

In the middle is the Auckland residential property market with a mixture of negative comments but also continuing listings shortages in some areas and one or two comments that Chinese buyers appear to be returning.

With regard to specific sectors the following broad comments can be made.

Accountancy

Lots of compliance work, tightening in rural areas.

Advertising and Marketing

Generally good activity. No indication of either fresh caution amongst clients or surge in spending.

Construction

Most obvious development is a lift in activity in the regions. Auckland as busy as ever, costs rising.

Engineering

Extremely busy

Farming

Very negative comments regarding dairying, sheep and beef less positive than before, venison good. Weakness in dairying is sharply affecting farm servicing companies.

Forestry

Quite positive comments including for sawmilling.

Horticulture

Nothing but positive comments spread across kiwifruit, avocadoes, blueberries, flowers and vegetables.

Manufacturing

Flat to good but with dairying weakness starting to come through for some.

Property Development

Strong growth apparent but slowing in Christchurch.

Property Management/Investment

Good tenant demand, rents rising typically less than 5% but one example of more, investors paying high prices to get stock.

Recruitment

Very busy but often with shortages of potential staff.

Residential Real Estate

Very strong outside Auckland and Christchurch. Some signs that Chinese buyers are returning to the market in Auckland but overall quite mixed comments for Auckland.

Retail

Margins squeezed but sales good overall.

Tourism

Absolutely booming. Never before have we received such an abundance of positive tourism sector comments.

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Selwyn Manning, BCS (Hons.) MCS (Hons.) is an investigative political journalist with 23 years media experience. He specializes in reportage and analysis of socioeconomics, politics, foreign affairs, and security/intelligence issues. Selwyn has extensive experience as a commentator and has provided live political analysis to a wide range of television and radio organizations broadcasting in New Zealand, Australia and globally including the BBC (Five Live, London) and BBC (World Service). He is currently a correspondent to Australia's FiveAA radio, and is a regular live-on-air panelist on Radio New Zealand's The Panel with broadcaster Jim Mora.

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