NZ: Is it nothing but election nerves? - BNZ

Craig Ebert, Senior Economist at BNZ, suggests that it looks like someone finally told the ANZ business survey that a tight election was afoot. Its net confidence tanked to zero in September, from +18 in August.

Key Quotes

“But while this is a big fall, bear in mind the level is still majorly suppressed by seasonality this time of year. When we correct for this we get a net confidence reading of +14, which, while lower than August’s +29, is higher than it was back in April +7. The long-term average is +11. So September’s result is no disaster, or even a stalling, more a bit of temperance from a seemingly bullet-proof attitude over prior months.”

“Activity expectations also fell in September – to +30, from +38 – but still had substance under the hood too. In seasonally adjusted terms we judged this variable to be +36, from +45. This is still an OK number, consistent with annual GDP growth at or above 3% (so stronger than we are forecasting).”

“It was also encouraging that employment intentions held up, at +15. However, this, like a lot of the other activity sub-indices, is certainly off its peak flow of a few months ago (when everything was pointing to annual GDP growth of more like 4%).”

“Whether or not the building industry is following this tendency, the latest ANZ survey had mixed messages. When looked at separately, expectations around residential construction and commercial construction each lost a lot of gas. They were down to +18 apiece, having been +36 and +29 respectively in August. Yet the construction industry, as a whole, maintained a very expansive view on its forward activity – at +35, from +31 in August. Its historical norm is +20.”