MNI POLICY: New Zealand ANZ Biz Survey Ups RBNZ Cut Prospect

--Confidence Deeply in Negative; Has Been Negative For 10 Straight Surveys

By Sophia Rodrigues

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

bank's New Zealand business outlook survey for August published Thursday, that

are likely to have implications for the Reserve Bank of New Zealand's monetary

policy:

     --Business confidence fell further into a still-deeper negative territory,

down around 5 points to -50.3 from -44.9 in July. Lower confidence and activity

levels in business surveys was the key reason the RBNZ turned dovish in the

August Monetary Policy Statement. The data would lead to market increasing bets

for official cash rate cut.

     --Activity outlook was steady in August but the level was low at a

nine-year low. The RBNZ watches activity outlook a little more than confidence,

and while it seems somewhat comforting that the level didn't fall further, the

fact that it is so low is probably more discomforting.

     --Some key indicators in the survey fell further. Of main concern was the

fall in investment intentions into negative zone, down to -4.7 points in August

from +0.6 points in July. Employment intentions also dropped into negative, and

exports fell further.

     --Another indicator of worry to the RBNZ is fall in inflation expectations

to 2.16% in August from 2.24% in July.

     --Among sectors, manufacturing saw a sharp turnaround from being one of the

most optimistic sector in April at +23 to be the most pessimistic sector in

August at -4.3.

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

[TOPICS: MANDS$,M$A$$$,M$N$$$,MT$$$$]