ANZ’s latest survey has revealed a big rebound in business confidence, as the number of businesses expecting general business conditions to deteriorate in the year ahead continues to plummet.
The survey found that a net 26% of businesses were expecting general business conditions to deteriorate in the coming year – which was a huge drop from the net 42% last month. Meanwhile, expectations of their own fortunes rose 17% point to a net positive 13% points.
Sharon Zollner, chief economist at ANZ, said the improvement in business confidence was “broad and consistent” – implying that lower interest rates and more favour exchange rate were working their way through the economy.
“The remarkable resilience of New Zealand's commodity prices is providing an invaluable buffer to the world's woes,” Zollner said, as reported by Stuff.co.nz.
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ASB Bank cancelled its forecast for a 25 basis-point interest rate cut in February following the survey findings.
“Business confidence still remains at low levels and consistent with sub-trend economic growth,” Jane Turner, senior economist at ASB, told Stuff.co.nz. “We look to future surveys to confirm an upward trend rather than just a stabilisation in confidence going forward.”
Stephen Toplis, research head at BNZ, meanwhile said they had predicted that business confidence will improve, but not as big as the one reported – adding that the survey reinforced their view that the official cash rate (OCR) will remain on hold for the foreseeable future.
"While the Reserve Bank might well see this as evidence of monetary policy working, many others might argue that the bank's recent pause in its policy plunge – since its August shock ease of 50bps – has calmed nerves out there in the business sector," Toplis said.