WELLINGTON: New Zealand business sentiment rose in June to a six-month high as the economy continues to show strong momentum, an ANZ Bank survey showed Thursday, but ANZ said Brexit could still force the central bank to cut its policy interest rate.
The survey's headline measure showed a net 20.2 percent of respondents expected the economy to improve over the year ahead, compared to 11.3 percent in the previous poll.
A net 35.1 percent of respondents expected their own businesses to grow in the next 12 months, up from 30.4 percent last month.
ANZ New Zealand Chief Economist Cameron Bagrie said the survey would seem to indicate there is no need for further rate cuts from New Zealand's central bank, but "the scene has been knocked by Brexit.
"The latter means a lower official cash rate is probably still likely," Bagrie said.
The central bank will meet August 11 and economists are currently expecting a 25 basis point rate cut to 2.0 percent.
The survey showed investment intentions were slightly higher, employment intentions were steady while profit expectations continued to rise.
Confidence in the construction sector, given New Zealand's hot housing market, is the highest since March 2015 while confidence in the agriculture sector continues to lag.
"Housing is booming. Little wonder construction is the front runner on almost every measure," said Bagrie.
New Zealand's house prices are among the fastest rising in the world, according to the International Monetary Fund, in large part to an influx of foreign investors and migration.
The agricultural sector, however, has been hard hit by tumbling global dairy prices. Up until recently dairy was the backbone of the economy, producing around 25 percent of exports. But dairy prices have dropped sharply since scaling record highs in 2013, due to China's economic slowdown and global oversupply.
The central bank estimates that around 85 percent of dairy farmers are currently operating at a loss.
Comments
Comments are closed.