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Business confidence continues to decline

NZN 31/03/2017 Sophie Boot

New Zealand business confidence eased in March, continuing February's fall, as sentiment dropped to average levels with declines from retailing, construction and agriculture.

A net 11 per cent of firms are optimistic about the general outlook for the economy, down from 16.6 per cent in February, according to the ANZ Business Outlook.

A net 39 per cent see their own activity expanding in the year ahead, up from 37.2 per cent a month earlier, and still north of the 28 per cent long-run average.

ANZ Bank New Zealand chief economist Cameron Bagrie said the survey continues to point to solid growth, although there had been a cool-down.

"While indicators are positive overall, we can sense some growing wariness," Mr Bagrie said.

"Once we adjust for seasonality, business confidence dropped to +4; that's well down from its high of +37 in September and lower than the historical average of +11. There is no shortage of hurdles for firms to consider."

However, Mr Bagrie said the most important indicators - firms' own activity expectations, employment and investment intentions - were not showing the same downward drift, and that was "tremendously encouraging".

The survey showed a net 21.4 per cent of firms intended to boost their investment in the coming year, down from 22.3 per cent last month, while a net 22.7 per cent wanted to hire staff compared to 24.2 per cent in February.

Business conditions sentiment turned negative in agriculture, with a net 7.9 per cent expecting conditions to deteriorate, from a net 2.6 per cent positive a month ago. Retail slipped to 9.3 per cent positive from 26.1 per cent positive in February, and construction fell to 6.9 per cent positive from 17.2 per cent.

A net 23.4 per cent of respondents foresaw increased profitability compared to 23.7 per cent in February.

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