Business Confidence keeps rising, Builders most optimistic

The latest Business Outlook survey from the National Bank contains more good news for those hoping the worst of the recession is over, with a net 6 per cent expecting business conditions to improve over the next 12 months. This is up 4 percentage points from the last survey held in May.

The construction industry is particularly optimistic, with a net 46 per cent expecting better times ahead, the highest reading in ten years.

A net 8 per cent of firms expect better times ahead for their own businesses.

Improving sentiment was apparent in all the major sub-groups, apart from services.

"These movements are welcome. But, like last month, the dog still has fleas. Profit, employment and investment intentions remain very weak, barely budging on the month prior," said National Bank chief economist Cameron Bagrie.

The labour market outlook had remained particularly poor with a net 17 per cent expecting to hire fewer staff in the year ahead, down 1 percentage point on May.

"Recovery will not become self-fulfilling until investment and hiring pick up. These are naturally lagged responses, but critical nonetheless," said Bagrie.

The bank's 'composite growth indicator' - made up of firms' own activity, profit, employment and investment expectations - remained negative, he said.

"The economy continues to contract. But like last month, the positive spin is that the pace of contraction is occurring at a slower rate."

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Posted: 30 Jun 2009

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