Business confidence surged to its highest level in a decade in August, with falling interest rates and expectations of an economic recovery.
ANZ’s survey for August showed general sentiment rose 23 points to a net 51% optimism, the highest since May 2014.
However, looking at other indicators since the survey, that level of confidence appears to be more a sign of relief at something positive than a complete momentum shift in the economy.
ANZ Business Confidence Index and ANZ Own Activity Index
The renewed confidence from businesses is also being incrementally found in the Performance of Manufacturing Index (PMI) and the Performance of Services Index (PSI), although this comes from a very low bar.
BNZ - BusinessNZ PMI Time Series
The manufacturing sector displayed modest improvement in August, with the seasonally adjusted PMI for August up to 45.8, up from 44.4 in July.
However, it remains below the expansion threshold of 50.0, with 18 consecutive months of contraction for the sector.
BNZ - BusinessNZ PSI Time Series
Activity in New Zealand’s services sector has been inching its way higher, but it is still firmly in contraction territory.
The PSI has now been in contraction for six consecutive months, the longest continuous period of decline since the global financial crisis.