Business confidence is on the up for the third month in a row, according to the latest National Bank Business Outlook report, reflecting a growing disconnect between local and global expectations.
A net 47 percent of respondents expect general business conditions to improve in 12 months’ time, up nine points on the previous month. Confidence lifted in four of five sub-sectors, with agriculture the exception, chief economist Cameron Bagrie said in the report.
In contrast, he says market expectations elsewhere in the world have been declining.
“New Zealand’s leading gauges has been completely at odds with the global scene, most notably relative to the United States, where various business confidence measures have been slipping sharply. Momentum is likewise softening in Australia, our largest trading partner.”
According to Bagrie, this is most likely due to region-specific issues (eg, cuts in US spending and the impact of the Japanese natural disasters) and the New Zealand business cycle decoupling to some extent.
Sentiment is high among the construction sector, with nearly half tipping increased residential activity (up from a third last month) and 31 percent expecting more commercial building, compared to 20 percent.
The strongest lifts in firms’ own activity expectations came from the “late bloomers” of the economic recovery: Northland (+13), Waikato (+24), Hawke’s Bay (+ 20), Taranaki (+20), Otago (+14) and Southland (+17).
"The rural regions are riding the massive terms of trade boost the economy is benefiting from, and we’re starting to see chequebooks open," he wrote.
“While Canterbury remains the most optimistic region according to general business confidence, such exuberance is not flowing through into other measures.”
Canterbury’s regional ranking on firms’ own activity expectations fell from 3rd to 13th and profits from 2nd to 6th. Employment plummeted down the ranks from 1st to 10th.
Other findings in the survey were that 39 percent of companies expect better times for their own business over the year ahead, down a point from May. Export intentions lifted by three points, with 31 percent planning to export more.
Ten percent also expect to lift staff levels in the coming year.