Business confidence 'languishing' as cold wind blows through housing industry

Thursday, 28 April 2022

Senior equity analyst Michael Kenealy on whether New Zealand's housing market is the canary in the coalmine for international investors.

Business confidence remains stuck in the doldrums despite the partial lifting of Covid restrictions and Omicron infections passing their peak, according to a survey by ANZ.

The bank found businesses’ lack of confidence in the economic outlook was virtually unchanged this month, with a net 42% expecting conditions to worsen.

Confidence among businesses in their own outlook edged up a little from March with a net 8% expecting that to improve, a rise of 5 percentage points.

* Grant Robertson on the economy, cost of living and the thing that keeps him up at night

* Isn't the Reserve Bank supposed to keep inflation down? So why haven't they?

Builders are reassessing their risks as the housing market turns south.

The bank reported mixed but mildly positive feedback on the inflation front.

ANZ found inflation pressures remained “extreme” and expectations of future inflation rose further from last month.

But it said cost pressures in the construction industry, which has been a big driver for rising prices, were easing.

“The outlook for residential construction is weakening rapidly,” it said, with builders in the midst of reassessing their risks.

ANZ forecast the Reserve Bank would be “pleased to see some of the heat coming out of the construction sector” which it said had been a trailblazer for domestic inflation pressures for some time.

Employment expectations were “hanging in there” with a net 9% of firms expecting to take on staff, versus a net 12% in March.