N.Z. business optimism high, says report

Press, 9 November 1983, Page 1

N.Z. business optimism high, says report

PA Wellington Short-term business optimism has been higher recently than at any time in at least the last eight years, according to a regular economic survey released yesterday.

The confidence was in spite of reports of dropping profitability and forecasts for further falls, which it said was unlikely to have any immediate effect on employment. The New Zealand Institute of Economic Research’s quarterly survey of business opinion for September said the business sector was “very confident” of a recovery in output and sales within three months. This followed on a decline in output and sales which stopped in the third quarter, the one under review. The survey,, a regular canvassing of 634 business enterprises of which 60 to 66 per cent usually file returns, said that all sectors re-

ported some growth in their activity during those three months. Business confidence in the next six months had risen sharply across the board. “A net 51 per cent of respondents in this survey are optimistic about the general business situation over the next six months. “Expectations have never been so high in the last eight years of asking this question.” The report said there were two factors underlying this confidence.: • Respondents saw a recovery in export activity. • Their stocks had been run down to more satisfactory levels. “In contrast to this confidence, however, are re-

ports of declining profitability and the expectations of a further deterioration in profitability over the next three months.”

The pressures pushing up costs, including interest rates, had eased, the report said.

Widespread falls in interest rates on loans were expected over the next year. The survey said the business community’s expected improved activity was unlikely to have any immediate effect on employment. “Instead, labour producitivity which has been increasing over the last three months is likely to rise further in the December quarter, according to respondents.” Respondents expected the recovery to be sustained through next year.