Business confidence falls again, but retail expected to turn around

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ANZ chief economist Sharon Zollner.
Photo: RNZ / DOM THOMAS

Business confidence fell again in March, driven by a big drop for services, while companies felt less upbeat about their own outlook.

The latest ANZ Business Outlook survey showed headline confidence fell 12 points to a net 23 percent, while companies’ own outlook fell seven points.

That followed a two-point drop in headline confidence in February.

Pricing intentions and inflation expectations also fell, with inflation expectations falling below 4 percent to 3.8 percent.

“Reported past activity – which has the best correlation to gross domestic product (GDP) – was a mixed bag, with a bounce for retail, agriculture and construction, but falls elsewhere,” ANZ chief economist Sharon Zollner said.

“Smoothing through the monthly volatility with a three-month average shows construction is experiencing the largest fall in activity, followed by retail, but the picture for retail appears to be brightening.”

Zollner said reported past activity suggested the economy might see low but positive growth in the first quarter of 2024, with ANZ forecasting a 0.2 percent quarterly lift.

As with the ANZ Roy Morgan consumer confidence survey, talk of recession affected the survey, but at a smaller level as 14 percent of responses came in after the latest economic growth data.

“And a similar pattern is evident: activity indicators were on the slide anyway, but the GDP data seems to have given things a decent shunt south,” Zollner said.