Some business optimism

Press, 2 May 1981, Page 7

Some business optimism

PA Wellington For two years businessmen have expected the general climate to get worse, but now a quarter of them expect things to pick up over the next six months. The quarterly survey of the New Zealand Institute of Economic Research says this of businessmen who have taken part in its survey of opinion. This optimism was reflected only to a limited degree in recent activity levels (except for the services sector) but there was generally some improvement in the respondents’ expectations of activity in the next quarter. “These expectations may not yet result in an actual improvement in activity, but there has been a steady trend of progressively less pessimism in most series recently,” said the survey. “These improved expectations do not seem unreasonable in the light of the institute's predictions of a

recovery in economic growth this March year, which is likely to be sustained in the succeeding year,” it said. “Lack of demand continues to be the dominant constraint on activity levels, but it is encouraging that there is some evidence of declining stock levels in this survey. “Both manufacturers, builders, and merchants report, on balance, that stock volumes have fallen, this quarter, for the first time for many surveys. “On the other hand, the survey reports little change in the unsatisfactory employment situation, and there is still no sign of inflation pressures abating or profitability recovering. “In the continued absence of a satisfactory policy tc reduce inflation and assist real corporate profitability in particular, there can be little confidence about the potential benefits of improved growth performance leading to improved living standards,” said the survey.