MNI POLICY: New Zealand Business Investment Intentions Fall

--Confidence Up But Deeply in Negative; Has Been Negative For 11 Straight

Surveys

By Sophia Rodrigues

     SYDNEY (MNI) -  - Business confidence rose in September but remained in a

deeply negative territory while investment intentions fell further into

negative, the ANZ bank's New Zealand business outlook survey for September

published Wednesday showed.

     Below are our key observations from the survey that are likely to have

implications for the Reserve Bank of New Zealand's monetary policy:

     --Business confidence rose 12 points in September to be at the highest

level since May but at -38.3 remained in a deeply negative zone. Activity

outlook also rose in September but at 7.8 points was at a relatively low level. 

     --A key disappointment in the survey and one that has significant

implication for monetary policy was investment intentions which fell further

into negative at -9.2 points from -4.7. Investment intentions has seldom been

negative in the survey's history, so a negative outcome for two consecutive

months needs particular attention because it is considered as a fairly good

indicator of near-term economic activity.

     --Most other indicators saw improvement in September, with export

intentions in particular rising to 18.6 from 7.8, likely reflecting the

depreciation in the New Zealand dollar in recent months.

     --While activity outlook overall improved, expectations in the retail

sector dropped 11 points to be the least positive at -13. ANZ says this is

surprisingly pessimistic given its own ANZ Consumer Confidence Survey showed

households still believe it is a good time to spend.

     --Inflation expectations fell for the second straight month, though the

decline was relatively modest -- 2.12% in September vs 2.16% in August and 2.24%

in July.

     --ANZ said that for this survey they asked firms about the largest problem

they face and once again they said finding skilled labour was the biggest issue,

with 26% of firms identifying this as their biggest problem. This could have

implications for wage growth in the economy and thus for RBNZ's monetary policy.

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

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