Review finds bright spot

Press, 26 October 1982, Page 30

Review finds bright spot

A good lambing season in many areas has injected a limited note of Optimism into a generally gloomy scene, according to the National Bank in its monthly “Economic Review.” The September survey, which was conducted in the second and third weeks of the month, showed few changes from the results recorded from a month earlier, it said. Expectations in the retail sector were more stabilised and the manufacturer’s views of 1983 appeared to have deteriorated slightly. Confidence in the construction sector had slipped further as credit tightened. Except for dairy farming, the farming residents had been reporting low confidence for many months. However. this moderated slightly in September as the lambing season progressed well in a number of areas, "but, in general, confidence levels remained largely unchanged." Against a background of uncertainty generated by considerable problems in world markets, investment plans in farming remained muted. Real capital expenditure was reported as being considerably down on last year, and it was clear that a sustained improvement in outlook would be necessary

to shift farm intentions upwards, the review said. Confidence in the retail trade continued to stabilise, based on the expectations of higher sales once the personal income tax cuts took effect. "However, the level at which this stabilisation is occurring is best seen in the context of the year so far.” After the post-election dip, retail confidence recovered strongly in the early months of 1982, fuelled by a prolonged period of pre-Budget spending. Fears of the imposition of a wholesale tax in the Budget caused confidence to fall sharply, but since the announcement of the price/ wages "freeze" and the Budget, this decline has been arrested. "There are no indications, however, of the buoyancy of the early months of the year being repeated. Judging by responses to questions on investment, respondents are uncertain on how business will develop in 1983," the review said. Although . respondents in the manufacturing sector were divided on short-term business prospects, there was a measure of agreement that 1983 was looking far less attractive than it did some months ago.