28 Oct 2010

Business confidence growing

8:18 am on 28 October 2010

A leading business confidence survey says confidence among firms rose for the first time in five months.

The National Bank survey for October showed that optimists outnumbered pessimists, with a net 24% expecting better times for the New Zealand economy over the coming year.

The figure is up from a net 14% who expected better times ahead at the time of September's survey.

Businesses were more confident about the general economy, as well as their own prospects.

Firms were even more optimistic when assessing their own prospects, with a net 30% expecting better times. That compares with a net 27% expecting better times in September.

A net 10% expect higher profits, up from just 3% in September. That is translating into hiring intentions, with a net 8% of businesses confident of taking on more workers, up from 1%.

However, the expected upturn does not look like flowing through to higher prices. A net 25% of firms expect to raise prices over the next 12 months, down from 30% in the September survey.

Export businesses and those involved in the construction sector were less confident than in September.

National Bank chief economist Cameron Bagrie, says while the general lift in confidence is encouraging, the high New Zealand dollar against its US counterpart poses a risk to an export-led recovery.