5 Jun 2018

Business confidence outlook pessimistic

6:31 am on 5 June 2018

Business confidence has eased to its lowest level this year.

New Zealand money

Photo: 123rf

ANZ Bank's monthly survey shows sentiment has become more pessimistic. Twenty-seven percent of businesses in April said the economy would get worse over the next 12 months, compared to 23.4 percent the month before.

Businesses confidence, regarded as a better indicator of economic activity, had also dropped. A net 13.6 percent of respondents expected their firms to do better in the year ahead, down from 17.8 percent in March.

ANZ chief economist Sharon Zollner said the latest business and consumer surveys pointed to annual economic growth of around two percent.

"The economy still has good tailwinds in the form of fiscal stimulus and the record high terms of trade, but may nonetheless be tiring."

Respondents were intending to invest less, employ fewer people, and were also expecting lower exports and profits.

Retail and construction sectors were the least confident sectors.

Business confidence had been down since last year's election, with firms reporting unease about the uncertainty over policies, increase to wages and planned changes to industrial laws. Confidence hit a near nine-year low in November last year.

The Budget forecast average growth of three percent for the next four years.

The Organisation of Economic Co-operation and Development said New Zealand would grow at least three percent over the next two years - faster than most economies.