MNI New Zealand NZIER Business Confidence Lowest Since Mar2009

--Leaves OCR Unchanged at 1.75%

By Sophia Rodrigues

     SYDNEY (MNI) - New Zealand business confidence fell further in the third

quarter to the lowest level since March 2009, the second of the two surveys

closely monitored by the Reserve Bank showed.

     The outcome was in contrast to ANZ Bank's latest monthly survey which

showed a small bounce in confidence, though the level remained deeply negative.

     Overall, the levels of confidence suggest downside risk to economy's growth

outlook and thus the RBNZ's monetary policy remain.

     The Quarterly Survey of Business Opinion published by the NZIER Tuesday for

Q3 showed a net 28% (-27.7) of businesses expect economic conditions to worsen,

compared to a net 21% (-21.1) in the Q2 survey. This was the lowest level since

March 2009.

     Firms' own activity outlook which has a greater correlation with growth

also fell to 9.9 points from 12.4 points.

     Investment intentions which is another key indicator watched by the RBNZ

showed a rebound to 3.8 points from 1.2.

     According to NZIER, factors affecting business confidence have been

government policy, labor costs, consumer confidence, availability of labor and

operating margins.

     "Larger firms were more influenced by government policy when assessing the

general business outlook. Retailers, manufacturers and builders were more

influenced by concerns over labour shortages and costs and consumer confidence.

This suggests uncertainty over the effects of new Government policies and higher

costs have contributed to the decline in business confidence over the past

year," NZIER said in a statement.

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

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