New Zealand: Business confidence slumps in April
Latest reading: The ANZ Business Confidence Index fell sharply to -10.6 in April, following March’s 32.5. The latest reading moved below the threshold of 0 that separates optimistic from pessimistic sentiment, marking a clear deterioration in business confidence, though ANZ noted that the April print was still better than the -22.5 average recorded in late-March responses. The slump was likely linked to surging global energy prices.
April saw a broad-based weakening across forward-looking indicators, with firms’ own-activity outlook falling to 19.6 from 39.3, investment intentions declining to 3.3 from 14.5, employment intentions turning negative at -2.7 from 9.4, and profit expectations dropping to -13.3 from 19.7. Export intentions, residential and commercial construction intentions, and credit expectations also weakened. More positively, reported past activity—which has the strongest correlation with GDP—was broadly steady at 16.9, compared with 17.5 in March.
Panelist insight: ANZ Bank analysts, who compiled the business sentiment survey, said:
“Firms are understandably concerned about the outlook for their activity and profitability in the face of this significant cost shock. But although the charts are ugly, many activity indicators (both forward and backward-looking) were actually higher this month than in the late-month responses received last month, suggesting some of the initial confidence shock has dissipated.”