New Zealand: Business confidence jumps in June
Latest reading: The ANZ Business Confidence Index jumped to 36.6 in June, up from 10.0 in May. The latest reading remained well above the threshold of 0 that separates optimistic from pessimistic sentiment, pointing to a further strengthening in business confidence. Much of the improvement occurred early in the month, before the sharp fall in oil prices mid-month, suggesting that firms’ sentiment had already begun to brighten prior to the easing in energy-price pressures.
June saw a broad-based improvement across several forward-looking indicators, with firms’ own-activity outlook, investment intentions, employment intentions, profit expectations and export intentions all rising from May. Ease-of-credit expectations also became much less negative. Construction indicators improved notably, with both residential and commercial construction intentions rebounding. However, reported past activity—which has the strongest correlation with GDP—fell compared with May, suggesting that while expectations improved, actual activity remained slower to recover.
Panelist insight: ANZ Bank analysts, who compiled the business sentiment survey, said:
“While times remain uncertain, firms appear to be more optimistic about what lies ahead, and generally more willing to invest and employ. Importantly, the lift in activity indicators wasn’t a kneejerk reaction to the sharp fall in oil prices that occurred midmonth – the improvement was already present in the responses in the first days of the month. While headwinds persist, this month’s survey offers hope that firms and the broader economy can to some extent pick up where they left off before the oil price spike.”