REPEAT: MNI ANALYSIS: NZ Nov Biz Confidence Deeply Negative

Repeats Story Initially Transmitted at 00:23 GMT Nov 30/19:23 EST Nov 29

--Lowest Confidence Reading Since 2009

By Sophia Rodrigues

     SYDNEY (MNI)-  - Confidence among New Zealand firms slipped deeply into

negative territory in November, falling to the lowest level since early 2009 due

to a combination of factors led by uncertainty around policy of the new

government, a softer housing market and difficulty getting credit.

     The data point to a continuation of accommodative monetary policy by the

Reserve Bank of New Zealand even though a rise in inflation expectations and

pricing intentions would be supportive of a tightening. The RBNZ's bigger

concern would be the risk that domestic demand does not pick up to the extent

expected, which could occur if consumption and residential investment, counter

to the central bank's current assumption, weaken in response to weaker house

price inflation

     The November survey, published by ANZ on Thursday, showed business

confidence fell to -39.3. The activity outlook also declined, to 6.5, well below

historical average of 28.

     While uncertainty around government policy is likely to be a key reason for

the deterioration of sentiment, it is important to take into account that a

softening in housing activity and house price inflation could be bigger

dampeners on confidence.

     "There is a non-trivial risk, given an economy at a delicate juncture, that

the fall in activity expectations could prove to be self-fulfilling. Outcomes

will depend crucially on how prolonged the apprehension proves to be," ANZ

warned in the report.

     The RBNZ has already reacted to the risk that the softening housing market

could have on the economy by announcing Wednesday a modest relaxation in its

macro-prudential measures and, more importantly, flagging the potential for more

easing in those measures depending on how the housing market evolves.

     Below are details from the survey: 

                          November  October

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

Business Confidence          -39.3   -10.01

Activity Outlook               6.5     22.2

Exports                       13.2     20.0

Investment Intentions          3.6     12.3

Employment Intentions         -2.7     14.2

Interest rates                58.6     41.0

Pricing Intentions            30.9     20.2

Inflation Expectations       2.34%    1.93%

Ease of Credit               -41.4    -30.7

Residential Construction      16.7     31.3

Commercial Construction        0.0     42.8

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

[TOPICS: MTABLE]