Optimism in the air for NZ businesses

Business confidence rose to its highest in more than three years in the third quarter and broadened beyond Canterbury, according to the latest Quarterly Survey of Business Opinion from the New Zealand Institute of Economic Research.

A net 32 percent of businesses were optimistic in the September quarter, seasonally adjusted, up from a net 30 percent in the June quarter, the institute said. That is the highest since March 2010 when a net 33 percent were optimistic.

Domestic trading activity, which is closely aligned with economic growth, rebounded in the quarter with a net 11 percent of firms experiencing a pickup in their own activity, the highest level in 10 years, the institute said.

That's an increase from a net 5 percent in the June quarter and 10 percent in the March quarter. The latest reading is consistent with about 3 percent annual economic growth in the September quarter, the institute said.

"Businesses are optimistic, activity is rebounding and this is being gradually realised into more jobs and profits," said NZIER principal economist Shamubeel Eaqub.

"Encouragingly, momentum is lifting outside of Canterbury. We are still not seeing inflationary pressures but it is definitely heading upwards."

Trading activity remains strong in Canterbury, even as it eased in the third quarter. A net 21 percent of firms in Canterbury experienced growth in September, down from a net 25 percent in the June quarter, the institute said.

Activity is accelerating outside of Canterbury, increasing to a net 12 percent in the third quarter from a net 6 percent in the second quarter.

A net 17 percent of firms expect to hire more workers in the next quarter, up from a net 9 percent last quarter.

Costs and prices remained subdued in September, the institute said. Inflationary pressures are concentrated in Canterbury, but there is little evidence of this spilling over to other regions yet, it said.

A net 24 percent of firms expect to raise selling prices, up from a net 22 percent last quarter. Meanwhile, a net 26 percent expect average costs to rise, down from a net 29 percent last quarter.

A net 12 percent expect profits to increase in the next quarter, up from a net 1 percent in the previous quarter.

By Tina Morrison - BusinessDesk