WELLINGTON: New Zealand’s business confidence in the third quarter improved slightly but the sentiment is generally downbeat, a private think tank said on Tuesday.
A net 52% of firms surveyed expected general business conditions to deteriorate compared with pessimism of 63% in the previous quarter, according to a quarterly survey of business opinion from the New Zealand Institute of Economic Research (NZIER).
On a seasonally adjusted basis, 53% expected business conditions to worsen, against 60% pessimism recorded in the previous period. The survey’s measure of capacity utilization rose to 87.3%, from the previous quarter’s 87.1%.
NZIER said the most significant development in the quarter through September has been the sharp easing in labour shortages, particularly for unskilled staff.
“These developments suggest that higher interest rates are starting to dampen demand in the New Zealand economy,” NZIER said in its report.
NZIER said that despite the easing in labour pressures, businesses are still experiencing strain from rising costs, with only a slight decrease in the proportion of firms reporting higher operating expenses in the September quarter.
The think tank also said New Zealand’s upcoming general election is adding to caution over new investment because of the uncertainty of the outcome.