New Zealand Business Confidence Begins To Weakens

The Bank of New Zealand reported a decline in overall business confidence today.  The Bank surveys firms engaged in retail, manufacturing, agriculture, construction and the service industries and publishes the results for each industry and for the total. The excess of those reporting an increase in confidence over those reporting a decrease in confidence for total business fell 8.2 percentage points from 48.2% in May to 40.2% in June.  The percentage point declines were greatest in the service industry, 12.3 points, and manufacturing, 6.6 points. Retail fell 3.1 points, construction 0.3 points and agriculture rose 1.1 points. 

There was a similar decline in the overall percent balance regarding the outlook where the percent balance for total business fell 6.8 points from 45.3% in May to 38.5% in June.  Again, the biggest decline was in the service industry, 11.0 points.  The decline in the percent balance of opinion on the outlook for activity in the construction industry was 7.2 points, for manufacturing, the decline was 5.1 points, and for retail, 4.1 points.  The only increase. one of 1.6 points, was that for agriculture.  The data are not seasonally adjusted but, as the attached chart shows, there appears to be a slowing down in the enthusiasm of the business community in New Zealand.

In addition to the firms' opinions of confidence and the outlook for activity, the bank also collects opinions on inflation, interest rates, the unemployment rate, employment, investment, profits, prices, exports, and capacity utilization for each of the five industries.  It also surveys the prospects for in investment in livestock and in residential and commercial construction. On practically all these issues the balances of opinion declined from May to June.  The increases in the percent balances on inflation and prices have negative implications for the economy.  The only meaningful positive was the increase in investment in livestock.  

.No surveys are conducted in January.  In the attached chart we have used the interpolation function found in the Tools Menu in DXSVG3 to eliminate the breaks in the series.

	Jun 10	May 10	Apr 10	Mar 10	Apr 09	2009	Low	Date
Business Confidence	40.2	48.2	49.5	42.5	50.1	38.3	-14.5	Apr 09
Business Outlook	38.5	45.3	43.0	38.6	41.9	36.9	-3.8	Apr 09