Business Confidence And Activity Outlook In New Zealand

The year has seen big swings in business confidence and in the outlook for activity in New Zealand. Confidence and the Activity Outlook are measured by the balance of opinion--those who see an improvement less those who see deterioration. In short, the balance between the optimists and the pessimists. The earthquake in Christchurch in February was followed by sharp declines both in confidence and the activity outlook in March.The balance on Confidence declined from 34.5% in February to -8.7% in March, while the balance of optimists regarding the activity outlook declined from 36.6% in February to 14.7% in March. Both measures continued to improve until July when the financial crisis in the Euro Area began to spread from the periphery towards the core countries Italy and, more recently, France. Since then, except for a small rise in both measures in November there have been steady declines in both measures. Confidence has declined from a balance of 47.6% in July to 16.9% in December. The balance on the Activity Outlook has declined from 43.7% in July to 25.7% in December. The percent balances for Confidence and the Activity Outlook are shown in the first chart.

The Survey covers five industries: retail, agriculture, construction, services and manufacturing. Measures of Confidence and Activity Outlook for each industry are shown in the table below for the current year, and, in the two charts, for the past seven years. Those engaged in agriculture appear to be the least optimistic regarding confidence and the outlook. Confidence improved in December for the manufacturing and services industries. However, only the services industry showed an improvement in the outlook activity measure and that was only from 27.6% in November to 28.7% in December.