Business confidence edges up

By Phil Boeyen, ShareChat Business News Editor

Tuesday 17th July 2001

An improvement in the export of manufactured goods and better domestic trading have bolstered business confidence.

In its June quarter survey of business opinion the NZ Institute of Economic Research says a net 1% of businesses surveyed now expecting the general business situation to improve over the next six months compared with a net 2% of firms who expected a deterioration in the March quarter.

The survey shows manufacturers, who had the largest increase in confidence this quarter, drove the overall rise in confidence, citing a rise in export sales. Further increases are expected over the next three months.

Retailers and wholesalers remain the most confident, while firms in the building and service sectors are pessimistic about the general business situation in the next six months.

The NZIER says along with the rise in business confidence, there has been an improvement in domestic trading activity this quarter, and expectations are that growth in domestic activity will rise over the next three months.

"Several factors have helped boost domestic trading activity growth. Moderate employment growth has encouraged households to spend, as have lower interest rates," the Institute says.

"Higher export earnings are also flowing through the economy, boosting domestic trading activity. These factors will continue to drive activity going forward."

However consumers could be in for higher prices.

The survey shows that more firms are intending to raise prices over the next three months, with intentions to raise prices most widespread amongst wholesalers and retailers.

"Economy wide, firms' intentions to raise prices have lifted firms' optimism regarding profitability, with wholesalers and retailers being the most optimistic. Retailers and wholesalers have positive employment intentions for the next three months."

Businesses report that it remains difficult to find skilled and unskilled employees, while output growth remains positive and is expected to strengthen over the next three months.

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