REPEAT:ANALYSIS:NZ Biz Confidence Hit By Political Uncertainty

Repeats Story Initially Transmitted at 00:37 GMT Sep 26/20:37 EST Sep 25

--ANZ Survey Shows Confidence Down to Zero, A Two-Year Low

By Sophia Rodrigues

     SYDNEY (MNI)-  - Confidence among New Zealand firms fell to a two-year low

in September, likely reflecting uncertainty regarding the general elections,

uncertainty that is likely to continue as no political party received a majority

in the election results released so far.

     The survey results suggest the Reserve Bank of New Zealand will leave its

monetary policy outlook unchanged at the official cash rate decision on

Thursday, with some risk that it will highlight downside risks in the domestic

economy.

     The ANZ Business Outlook for September, published Tuesday, showed

confidence plunged to zero from +18.3 in August, reaching its lowest level since

September 2015. The survey was taken prior to the September 23 general elections

and reflect the uncertainty ahead of the vote.

     The results announced so far show the National Party emerging with the most

seats but not enough to form a government on its own. They will be forced to

seek the support from the populist New Zealand First party to create a ruling

coalition. 

     The Labour Party will also seek to do the same.

     Irrespective of who eventually forms the government, it is likely business

uncertainty over government policies will continue, especially given NZ First's

strong stance against immigration and foreign investors.

     Other of political uncertainty, the biggest negative in the survey was a

pullback in residential and commercial construction, following a rebound the

month before. Construction is very important for the RBNZ's monetary policy

because it is expected to be the key driver of non-tradable inflation.

     Another dampener was a sharp fall in investment intentions to +13.2 from

+22.8.

     Overall, the activity outlook fell to +29.6 from +38.2 due to easing in

exports, employment and profits.

     On the positive side, inflation-related indicators edged slightly higher in

September. Inflation expectations rose a tad but fell short of the mid-point of

the RBNZ's target band. Pricing intentions also rose slightly and there was a

mild increase in the proportion of businesses expecting interest rates to go up.

     Below are details from the survey: 

                          September  August

-------------------------------------------

Business Confidence             0.0    18.3

Activity Outlook               29.6    38.2

Exports                        24.5    26.8

Investment Intentions          13.2    22.8

Employment Intentions          15.1    17.1

Interest rates                 41.6    39.9

Pricing Intentions             21.1    20.5

Inflation Expectations        1.98%   1.88%

Ease of Credit                -26.2   -23.3

Residential Construction       17.6    36.4

Commercial Construction        17.7    28.6

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

[TOPICS: MTABLE]