Canterbury's rebuild has underpinned a rebound in business
confidence for the quarter to September, but also highlights
the uneven economic recovery across other regions.
Overall, business confidence is now at its highest in more
than three years.
The number of optimistic businesses had risen from 30% in the
previous quarter to 32%, while domestic trading activity, a
reliable indicator of gross domestic product (GDP) growth,
rebounded from 5% to 11%, according to the quarterly New
Zealand Institute of Economic Research business opinion
NZIER's principal economist Shamubeel Eaqub said the rebound
in domestic trading activity from 5% to 11% had reversed a
small drop in June, which was consistent with about 3% annual
''Businesses are optimistic, activity is rebounding and this
is being gradually realised into more jobs and profits,'' Mr
However, the recovery is uneven across regions and while
Canterbury was ''growing strongly'', momentum was waning
across some key indicators, such as investment intentions, he
Westpac senior economist Michael Gordon said general business
sentiment remained ''strong'' during the September 2013
quarter and a net 32% of firms expected improvement during
the next six months.
That matched the previous peak, reached in the March 2010
quarter, which reflected optimism about a post-recession
''A net 11% of firms reported stronger activity over the last
three months, the equal-highest since 2007, while
expectations for the next quarter were the strongest in over
a decade,'' Mr Gordon said.
ASB economist Daniel Smith noted businesses' expectations of
their own activity levels also crept up, suggesting the
economy ''should expand at a fair clip'' during the rest of
While overall confidence had not changed much during the past
two quarters, the composition had, Mr Smith said''We've seen
a steady broadening of confidence across sectors and regions.
''Earlier in the year, the building industry and the
Canterbury region were the drivers of the high overall
readings,'' he said.
However, confidence had since risen across the other parts of
the economy, suggesting a slowly broadening recovery.
He said one of the most encouraging results from the survey
was the employment category. Employment during the past
quarter dipped from 3 to 1, remaining very subdued, but
expected hiring during the next quarter jumped from 9 to 17,
the strongest reading since the fourth quarter of 2004.
''That suggests that labour market conditions are likely to
improve more rapidly,'' he said.
Despite Canterbury's recovery, Mr Smith said inflation
pressures remained ''very muted for now''. Although resource
constraints were creating some pressure in the Canterbury
economy, the national economy still retained plenty of spare
As that capacity was progressively absorbed, ''we expect
inflation to pick up from its currently very low level during
the next few quarters'', he said.