Economic activity accelerated in the second half of the
year with businesses the most optimistic they have been for 20
years, the NZIER quarterly survey of business opinion shows.
New Zealand Institute of Economic Research principal
economist Shamubeel Eaqub said optimism and activity were
being realised as better profits, higher investment and more
In December, businesses were the most optimistic since June
1994, at 52%, up from 33% in September.
Domestic trading activity strengthened to the highest level
since March 2005, with 15% of firms reporting increasing
activity, up from 12% in September.
Reported hiring rose to the highest level since December 2006
and firms expected to hire more staff at the start of this
year, suggesting an improved outlook for jobs and wages, Mr
However, the Hudson Report of employment trends released this
morning, showed hiring expectations dipped in December, with
60.3% of more than 1000 employers saying they intend keeping
staffing levels in the first half of the year.
Mr Eaqub said the recovery was broadening across regions.
Until recently, much of it was concentrated in Canterbury.
''This has now broadened to most regions across New Zealand,
which points towards a more sustainable and stable recovery.
Activity also accelerated across all sectors.''
Price increases were subdued, he said. Firms did intend
raising prices due to increasing capacity pressures and
strengthening economic growth. Capacity constraints were most
pronounced in Canterbury but were starting to emerge in other
More financial services sector firms expected interest rates
would rise, consistent with expectations in December 2013, Mr
BNZ senior economist Craig Ebert said the survey results did
not up the ante regarding the rate of New Zealand's economic
expansion and inflation risk.
It remained consistent with gross domestic product (GDP)
growth running around 4% at an annual pace, above trend.
While there was further confirmation of business investment
ramping up, helping to keep capacity pressures at bay, there
remained clear indications the labour market was tightening,
Overall, the survey was no ''smoking gun'' on inflation and
it should leave the Reserve Bank comfortable with starting
its stimulus withdrawal - raising interest rates - at its
March 13 Monetary Policy Statement at the earliest, rather
than being pressured to lift rates in the January 30 official
cash rate review.
ASB economist Christina Leung said the NZIER survey provided
an encouraging picture of New Zealand economic growth over
the coming year, in line with the lift seen in earlier
monthly business confidence surveys from October to December.
The detail of the report, while encouraging, was not as
strong as the lift in headline numbers suggested.
Architects' outlook on building work eased but remained at
historically high levels.
ASB expected the Canterbury rebuild and stronger
house-building demand to be the key drivers of construction
growth over coming years, she said.