New Zealand’s business sentiment rebounds slightly in Q4 2018

New Zealand’s business sentiment rebounds slightly in the fourth quarter, although sentiment stays at comparatively low levels. The headline business sentiment index rose to -18 in the December quarter from -28 in the prior quarter as pessimists continued to outnumber optimists when it comes to the outlook for the next 6 months.

The QSBO survey’s own activity measure saw some rebound, with a net 4 percent of companies recording a lift in their own trading activity in the past three months. Companies were also more positive regarding their own activity in the next three months with this series lifting to 17, its highest reading since September 2017.

Worries regarding business sentiment has dissipated slightly in the recent months as the level of business sentiment has stabilized, although at low levels, and data on real economic activity has shown the economy continues to expand at a moderate rate.

Nevertheless, a feature of recent sentiment surveys has been growing signs of inflation pressure. This was again clear in today’s data with a net 48 percent of companies reporting a lift I costs in the past three months. However, companies continue to be cautious regarding their ability to pass on cost rises, and indeed whether the rate of recent costs rises will persist into the Ney Year, noted Westpac in a research report.

Pricing intentions dropped sharply in the fourth quarter that was seen in a further deterioration in companies’ reported profitability in the past three months. This dropped to -24, the softest reading for this series since 2011.

At 11:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was highly bullish at 142.683, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 10.5108. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex