WELLINGTON: New Zealand business confidence slipped to a 15-month low and building data suffered its sharpest fall in almost two years, reinforcing views that interest rates will remain on hold until early 2011.
The National Bank of NZ's monthly business outlook for September showed on Thursday, Sept 30 a net 13.5% of respondents expected the economy to improve over the next 12 months, down from 16.4% in August. It was the lowest since June 2009.
The survey, however, showed a net 26.7% of firms expected their own business to improve, up from 25.7%.
"The central bank has scope to take a supportive stance by keeping interest rates low, nursing confidence and the economic patient back to a firmer footing," said ANZ-National economist Steve Edwards.
The New Zealand dollar was little changed on the confidence data at around $0.7367 (RM2.28) though earlier building data had sent a shudder through the currency.
The number of approvals to build new homes fell 17.8% in August, the largest fall since October 2008, briefly pulling the kiwi dollar down to $0.7348.
The new data chimes with other recent indicators that have raised doubts over the strength of recovery: rising unemployment, a faltering housing market and soft consumer spending.
Several of the September confidence survey's key indicators fell, including profit expectations, employment and investments. Hiring intentions fell sharply to 0.8 from 4.3.
Reflecting the softening outlook, inflation expectations for the year ahead eased to 2.94% from 3.08% in August.
The survey pointed to economic growth of 3% growth over the year ahead, but Edwards said: "With employment and investment components now missing in action, it's a far cry from what we would consider to be a robust or durable expansion."
The central bank left its cash rate unchanged at 3.0% this month amid a soft economic outlook and said future rate rises would probably be slower than expected.
Financial markets have slashed their expectations over the scale and speed of rate rises, with analysts pushing the next rate rise into early next year.
Reflecting the tepid recovery, the amount of tightening seen over the next 12 months fell to 49 basis points from 65 basis points earlier last week.
Meanwhile the government tax changes due to begin taking effect from Oct 1 will add about 1% to economic growth over the next few years.
From Friday personal income tax rates will be cut while goods and services tax will rise to 15% from 12.5%. -- Reuters
The National Bank of NZ's monthly business outlook for September showed on Thursday, Sept 30 a net 13.5% of respondents expected the economy to improve over the next 12 months, down from 16.4% in August. It was the lowest since June 2009.
The survey, however, showed a net 26.7% of firms expected their own business to improve, up from 25.7%.
"The central bank has scope to take a supportive stance by keeping interest rates low, nursing confidence and the economic patient back to a firmer footing," said ANZ-National economist Steve Edwards.
The New Zealand dollar was little changed on the confidence data at around $0.7367 (RM2.28) though earlier building data had sent a shudder through the currency.
The number of approvals to build new homes fell 17.8% in August, the largest fall since October 2008, briefly pulling the kiwi dollar down to $0.7348.
The new data chimes with other recent indicators that have raised doubts over the strength of recovery: rising unemployment, a faltering housing market and soft consumer spending.
Several of the September confidence survey's key indicators fell, including profit expectations, employment and investments. Hiring intentions fell sharply to 0.8 from 4.3.
Reflecting the softening outlook, inflation expectations for the year ahead eased to 2.94% from 3.08% in August.
The survey pointed to economic growth of 3% growth over the year ahead, but Edwards said: "With employment and investment components now missing in action, it's a far cry from what we would consider to be a robust or durable expansion."
The central bank left its cash rate unchanged at 3.0% this month amid a soft economic outlook and said future rate rises would probably be slower than expected.
Financial markets have slashed their expectations over the scale and speed of rate rises, with analysts pushing the next rate rise into early next year.
Reflecting the tepid recovery, the amount of tightening seen over the next 12 months fell to 49 basis points from 65 basis points earlier last week.
Meanwhile the government tax changes due to begin taking effect from Oct 1 will add about 1% to economic growth over the next few years.
From Friday personal income tax rates will be cut while goods and services tax will rise to 15% from 12.5%. -- Reuters
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