30 April 2009
Source: Dominion Post
Business owners are still pessimistic but dramatically less so than they were last month, according to a National Bank business confidence survey.
The results were encouraging and it appeared the economy might be finding a floor, the bank’s chief economist, Cameron Bagrie, said.
“It’s about smaller rates of decline as opposed to moving into outright positive territory,” he said.
“Time and time again business confidence surveys have proved to be telling indicators of economic momentum.”
The survey of 445 business owners found a net 15 per cent of respondents expected a deterioration in business conditions, compared with a net 39 per cent in March the largest monthly improvement since 2000.
When asked about their own businesses, a net 4 per cent expected worsening conditions, down from a net 21 per cent in March the biggest improvement since 1993.
Retailers were the most pessimistic about their own businesses, with a net 25 per cent expecting things to get worse, while the agricultural sector was the most optimistic with a net 15.1 per cent expecting things to improve.
Mr Bagrie said improving sentiment may have been driven by housing market volumes picking up, tax cuts, a small recovery in dairy prices and domestic and international equities moving off their lows over the survey period.
But at the same time, financial conditions had tightened because of the stronger currency and rising fixed mortgage rates.
“After such an extended period of decline, it’s only natural to expect a base to be forming. After all, policymakers have been working hard to achieve such stabilisation since mid 2008.”
Negativity about employment prospects was down a net 19 per cent of respondents expected to reduce their workforces compared with a net 28 per cent in March but remained a key spanner in the works towards a recovery taking hold, Mr Bagrie said.
UBS senior economist Robin Clements said the figures could reflect the fact that the previous excessive pessimism had been overdone.