Economic Analysis by Tony Alexander. [caption id="attachment_3709" align="alignleft" width="150"] Tony Alexander, BNZ economist.[/caption] This week I discuss the recent reduction in business confidence but how the spread between winners and losers across sectors in NZ at the moment is amazingly wide. If tourists could be encouraged to spend a day frolicking with cows that would be great. Exchange rates have moved little while some retail interest rates have been lifted in response to bank funding costs rising offshore as the world gets concerned about offshore bank exposure to the likes of the energy sector and we Australasian banks get caught in the backwash.
For the full analysis, continue reading below or Download document (Business Slightly More Cautious – But The Averages Hide Wide Disparities We received evidence this week that the spike in concerns about world growth, wobbly sharemarkets, and renewed decline in dairy prices has dented the sentiment of the country’s business sector. A net 7% of respondents in the latest ANZ Business Outlook survey say that they feel optimistic about the economy in a year’s time. This is down from a net 23% in December and slightly below the ten year average reading for this measure of +10%. Thus caution prevails out there. Is it much denting intentions of hiring and investing however? A net 12% of businesses say they plan hiring more people. This is down from 20% in December so a sizeable drop. But it is still twice the average February reading of just +6% so we remain prepared to say that jobs growth will be reasonable going forward. Though it depends of course upon what sector you are thinking about. Hiring intentions are well above average in retailing, manufacturing and services. But at -8.7% agricultural intentions are below the net 2% positive average and at 0% the construction sector reading is below the 10% average and December’s 30% reading. That is probably the most interesting of the employment readings and worth keeping an eye on because it will probably not stay that weak given the volume of work coming up.