NZIER survey showing another terrible business confidence reading in New Zealand
NZD lower on this release.
Quarterly Survey of Business Opinion, key highlights:
Net 27 percent of businesses expect a deterioration in general economic conditions over the coming months - close to levels seen back in the September 2018 quarter.
Firms' own domestic trading activity, a net 1 percent of businesses reporting weaker demand in the first quarter of 2019. This is in contrast to the net 4 percent of businesses that had seen an increase in demand in the December 2018 quarter.
- Firms' own trading activity is a better measure of economic growth, and the results suggest a further softening in annual GDP growth over the first quarter of 2019.
Businesses across most sectors reported a weakening in domestic demand
manufacturers remained the most pessimistic
domestic sales dropped sharply
export demand strengthened
Cost pressures remain intense in the sector, and with pricing still subdued, this is contributing to continued weak profitability.
The outlook for the building sector is also gloomy
Businesses are finding it increasingly difficult to raise prices despite rising cost pressures
Firms more cautious about expansion
- With firms expecting profitability to remain weak over the next quarter, there is more caution when it comes to expansion plans. This is particularly the case for business investment, with a net 2 percent expecting to reduce investment in plant and machinery - the weakest level since March 2012.Firms are also more cautious about hiring, although a net 6 percent of businesses are still looking to increase headcount. Despite the softening in hiring, labour shortages remain acute. This should support a further lift in wage growth over the coming year.
more to come
