1 Aug 2012

Business confidence starts to stabilise - survey

7:01 am on 1 August 2012

National Bank chief economist Cameron Bagrie says business confidence is starting to stabilise following a downward trend in the last few months.

The monthly National Bank Business Confidence survey found a net 15% of firms expect business conditions to improve over the year ahead, up slightly from 13% last month.

And 24% of firms expect more activity out of their business over the coming year.

However, only 9% of firms are anticipating exporting more over the next 12 months, the lowest exporter confidence has been since May 2009.

Mr Bagrie says the global situation is still fraught with risk centring on what's happening in Europe.

But Mr Bagrie says there are also signs of a slowdown in China which is New Zealand's second biggest trading partner, while Australia and the United States are also showing signs of weakness.

He says commodity prices are coming under pressure at a time when the New Zealand dollar has gone back up in relation to the US, which is eroding farm gate returns.

Mr Bagrie says the export intention figures are not an encouraging sign in terms of driving the right mix to growth because New Zealand needs more export investment growth, but what's being seen at the moment is more spend-thrift growth.

The construction sector experienced the greatest fall in confidence, business activity expectations, profit and employment.

Mr Bagrie says growth is still expected in the sector but it will be more gradual.

He says despite the marginal change, flat-lining is better than declining confidence.

Mr Bagrie says there's been a slight pick up in general confidence in the last month, but across the board it still looks pretty scratchy.