NZ business confidence slows in June on pessimism in agri sector

Business confidence in New Zealand slowed during the month of June following pessimism in the agricultural sector. However, the dip was mostly predicted by economists as seasonal.

A net 16 percent of firms surveyed in the ANZ Business Outlook expect better economic conditions in the coming year, down from a net 20 percent in June, while a net 31 percent thought their business would do better, compared to 35 percent a month earlier.

Construction firms were the most upbeat with a net 52 percent expecting residential building to increase, a 19-month high and a surge from net 29 percent in June. A net 38 percent of firms foresee more commercial building work in the year ahead, from net 28 percent a month earlier.

The survey of 388 firms showed the agricultural sector was still pessimistic about the economy with a net 26.3 percent expecting it to deteriorate, compared to a net 17 percent in June. Agriculture was the only sector which was net negative about investment and employment intentions and profit expectations.

Moreover, pricing intentions dipped with a net 17.4 percent looking to raise prices in the coming year, down from 20 percent a month earlier. A net 12.3 percent of manufacturers expect to increase prices, while a net 39.4 percent of construction firms intend to do so. Inflation expectations were steady at 1.49 percent.

Meanwhile, ANZ New Zealand Chief Economist Cameron Bagrie said that 31 percent of net optimism about firm's own prospects was still above average, and largely the same when accounting for seasonal changes.