Business confidence still plummeting

 

Stuff?reports that business confidence is still falling, reaching new lows in August. quote:

Business confidence continues to slide, with more companies planning to cut back on investment in the coming year.

The latest ANZ business outlook survey for August showed headline business confidence – a which has become a highly contentious measure – dropped a further 5 points, with a net 50 per cent now expecting conditions to deteriorate.

Own activity – a measure of what business figures expect to see from their own companies – was flat. The measure tends to be a better indication of economic growth. end quote

This survey was taken before the announcement of the Business Advisory Council this week, but it seems unlikely that this will make much difference to business confidence. Really, it is just another advisory group, and in spite of the claims that it won’t be another ‘talkfest’, that is exactly what it will be. quote:

But at a net 4 per cent expecting conditions to improve in the coming year, the measure suggests the economy growing at well below average.

The New Zealand dollar dropped on the news, down around one third of a cent against the US dollar. end quote.

I know that some people think a falling dollar is a good thing, but personally, I don’t. I just want to make this clear. No one complains about the high Swiss franc. If our dollar drops, then it may make life easier for exporters… but then everything else gets more expensive because fuel becomes more expensive.

Let’s face it, we have seen fuel prices increase to over $2.30 per litre for petrol in the last week or so and that is in areas that do not have local additional petrol taxes.

Yet. quote:

A net 5 per cent of companies said they expected to decrease investment in the coming year according to the survey. ANZ said it was rare for the reading to be negative.

“If this weakness is sustained, it will not bode well for [economic]?growth heading into the end of the year,” Zollner said. There was “downside risk” that the economy would grow at an annual rate of 3 per cent over the second half of 2018, she said.

ANZ published a survey showing historic investment intentions in its survey tended to show a strong link with economic growth in the following months, which on current?trends point to a continuing slowdown. end quote.

As I keep saying, business hates uncertainty. So the continued slowdown is real. Whether Jacinda wants it in flashing lights or not. quote:

“When firms tell you they’re going to stop hiring and investment, you generally get a hole in employment?and GDP [economic] growth.”

Westpac was expecting that economic growth would increase in 2019, boosted by stronger government spending.

“We suspect that a large part of the fall in business confidence reflects firms’ discomfort with the new Government’s policies, especially the planned changes to labour laws,” Gordon said. end quote.

Westpac just seems to be drinking the government Koolaid. They have already said this week that business needs to ‘get over it’.?Westpac is the government’s bank, remember, so I guess it is fair to say that they have a vested interest in supporting the government. This means that nobody should take any real notice of what their economists say about government policy or business confidence.

We need to just ‘get on with it’? Really, Westpac?

I think we need to consider how badly business confidence is falling because confidence affects everything.

And then ask ourselves – how much confidence do we have in our government’s handling of the economy?

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