Source: Radio New Zealand
Retail is more concerned about the exchange rate than other sectors, ANZ’s chief economist says. RNZ
Business confidence has dived as firms continue to digest the implications of the war in Iran, mirroring last week’s consumer confidence survey.
The ANZ Bank’s monthly business survey shows confidence fell 26-points in March to a net 33 percent from 59 percent in February, while other indicators also plummeted.
Inflation indicators also rose, with a net 60 percent of firms expecting to raise prices in the next three months – an increase of 7 points.
ANZ said survey results gathered during the past week were weaker still, which did not bode well for April’s reading.
The net percent of firms expecting cost increases rose to a net 85 percent from 79 percent, which was the highest rate in about three years.
“It’s unsettling times for businesses,” ANZ chief economist Sharon Zollner said.
“Just as the economic recovery was starting to feel real, dark clouds have gathered. It’s not just anxiety about the future.
“Many firms are already reporting that their activity has taken a hit as people defer their decision-making in the face of uncertainty.”
In terms of impacts already being experienced, overall activity fell to net 18 percent from 23 percent of firms reporting stronger activity than a year ago.
The retail sector was down 20 points to 5 percent, with construction down 16 points to a negative 13 percent.
She said past activity, which was the best indicator of GDP, took a hit, particularly in the late-month data.
“The fall in the activity indicators as the month went on is understandable, as it has become increasingly clear that this is not a short-lived shock, but something more persistent.
“Firms are understandably in a mood to reduce their risk-taking, but the unfortunate truth is that one firm’s risk (a purchase, an investment, a hire) is someone else’s opportunity.”
She said the weakness was broad-based.
Biggest problems
Zollner said competition was still the number one problem facing businesses, while non-wage costs were also starting to grow, along with concerns about the Middle East and government policy.
“By sector, retail is more concerned about the exchange rate than other sectors,” she said.
“Construction is particularly concerned about competition, and turnover remains a significant worry for retail, construction and manufacturing.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
