By Lucy Craymer
WELLINGTON (Reuters) – New Zealand’s business confidence in the fourth quarter of last year hit its lowest level since 1974 as companies grapple with higher interest rates, cost pressures and soft demand, a private think tank said on Tuesday.
A net 70% of firms surveyed expected general business conditions to deteriorate compared with 42% pessimism in the previous quarter, the New Zealand Institute of Economic Research’s (NZIER) quarterly survey of business opinion (QSBO) showed.
It added that business confidence is now at its lowest level since 1974, while on a seasonally adjusted basis it is the weakest since the survey started in 1970.
On a seasonally adjusted basis, 73% expected business conditions to worsen, versus 43% pessimism recorded in the previous period. The survey’s measure of capacity utilisation fell to 93.7%, from the previous quarter’s 94.5%.
NZIER said the survey was undertaken following the more hawkish than expected central bank meeting in November and this was weighing on sentiment.
The builders and retailers were the most downbeat in the December quarter. Firms have become much more cautious and are now looking to reduce staff and investment plans, NZIER said in its report.
A net 81% reported increased costs in the December quarter, it said.
(Reporting by Lucy Craymer in Wellington; Editing by Matthew Lewis)