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National Bank Business Outllook

Fuseworks Media
Fuseworks Media
National Bank Business Outllook

Business confidence picked up in October. A net 24 percent of respondents expect general business conditions to improve in 12 months time, up 10 points on the month prior. Business confidence improved across all sub-components, led by lifts in services, manufacturing and retailing. Seasonal factors appear to account for a sizeable share of the lift such that the underlying movement was more muted.

Despite a generally low level of outright business confidence towards the general economy (though improving), firms' perception towards their own business remains perkier. A net 31 percent expect better times for their own business over the year ahead, up 4 points from September. Such movements are well within the normal monthly variability of the survey, and while referring to it as a turning point may be a stretch, the precipitous five month decline has at least been arrested.

After what seemed like a winter of discontent, we'll take any spring that appears to be returning to our step. The same small guarded steps in a positive direction are apparent across other survey indicators. Profit expectations improved. A net 10 percent of firms expect profits to be higher going forward, up from a net 3 percent last month. A net 8 percent of firms expect to be hiring staff over the coming year, a jump from the net 1 percent last month. Investment intentions rose 2 points.

The casualty in this months' survey is export intentions, which dipped 12 points. A net 20 percent expect to be exporting more over the year ahead, down from a net 32 percent last month. After months of shrugging off the steady rise in the NZ dollar exchange rate, the breach of 75 cents against the US dollar appears to have been a tipping point. There are still positives for exporters.

The NZD/AUD remains low and international soft commodity prices have risen 5.4 percent in the past six months. Residential investment intentions and commercial construction intentions have failed to kick on. Both fell, with commercial construction going from -8 to -16, the lowest level since April 2009.

Confidence within the Canterbury region is well above the national average across a number of gauges. A net 56 percent of Canterbury respondents expect better times for their own business for the year ahead (previously a net 39 percent). Employment intentions rose from 15 to 19, investment intentions from 8 to 22, and residential investment intentions from 42 to 78.

Our composite growth indicator from the survey continues to flag a respectable year-on-year rate of growth of close to 4 percent by early to mid next year. This is pointing to solid demand, although the components appear more sketchy and scratchy nature.

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