NZ: Modest lift in business confidence in May – Westpac

Michael Gordon, analyst at Westpac, notes that New Zealand’s business confidence improved in May, but remained at relatively low levels.

Key Quotes

“A net 32% of firms were downbeat about the general economy, compared to 38% in April. Own-activity confidence improved slightly to +8%, but remains well below its long-run average.”

“The major development since the last survey was the Government’s surprising announcement that it would not pursue a capital gains tax. We expected that this decision would help to boost business confidence, though it was by no means the only issue that businesses have had to grumble about.”

“The other recent development of note was the 25 basis point cut to the OCR in early May. This may have had a lesser impact on confidence, as respondents in the April survey were already expecting a fall in interest rates (albeit perhaps not this soon).”

“The biggest lift in confidence was in the retail and manufacturing sectors.”