- Christina Leung, NZIER senior economist
New Zealand business confidence fell to its lowest level since March 2011 in the third quarter, with local companies predicting conditions to worsen in a tougher economic climate. According to the New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion, a seasonally adjusted net 9% of firms now expect business conditions to deteriorate over the next six months, compared with a net 6% that had expected conditions to ameliorate in the second quarter. The decrease in confidence came in contrast to companies own trading activity. A seasonally adjusted net 12% of businesses reported an improvement in their own trading activity over the past quarter. Even more positive was the recovery in businesses' expected trading activity over the past quarter, with a net 17% expecting an improvement.
A sustained drop in dairy prices, forecasts for dry weather, and subdued inflation saw the Reserve Bank of New Zealand cut the official cash rate three times this year, from 3.5% to 2.75%, and forced economists to revised downwards their outlook for economic growth. Adding to that, concerns about a slowing Chinese economy and how that will impact demand for commodities added to uncertainty.
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