MNI 5 Things: New Zealand ANZ Survey Shows Construction A Risk

--Confidence, Activity Outlook Ease But Pricing Indicators Improve

By Sophia Rodrigues

     SYDNEY (MNI) -  - Below are the five observations we made from the ANZ

bank's New Zealand business outlook survey for May published Thursday:

     --Business confidence fell further in May and has been in the negative zone

for the seventh straight survey. Confidence has been in the negative for all the

five main sectors for the third straight month, with the worst confidence in

agriculture (-39.0 in May vs -45.7 in April) and the highest in services, though

this worsened further in May (-25.2 vs -14.3 in April). 

     --Activity outlook also eased in May to the lowest level since November.

While the outlook lifted for agriculture, it eased 10 points in retail.

     --Despite easing in confidence and activity outlook, pricing indicators

improved in May. Inflation expectations rose a tad to 2.13% from 2.11% and

pricing intentions rose to 26.3 from 22.3. Significantly retail pricing

intentions bounced back to a more typical level.

     --Construction intentions were mixed with residential improving by 8 points

to 17.4 but commercial easing slightly to 4.8 from 5.3. The industry's own

activity measure remained downbeat at 4% and capacity utilization dropped

sharply, indicating the industry is facing significant challenges. This industry

needs to be monitored closely as it will have an impact on the Reserve Bank of

New Zealand's monetary policy.

     --According to ANZ, the survey made for fairly uninspiring reading this

month, with all aggregate activity indicators flat to falling. The economy still

has good tailwinds in the form of fiscal stimulus and the record-high terms of

trade, but may be tiring nonetheless, ANZ said.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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