Business Confidence down down down …

I’ve been tracking the National Bank business confidence survey for years, and even have the data back to 1988. The fall to -48% is the 4th lowest in history. It was at negative 67% to 69% in March and April 1988, and at -56% in June 2000. The other 190 or so months have all been higher with 68 months with net negative confidence and 120 months with a net positive outlook.

The NZ Herald quotes the National Bank Chief Economist as predicting economic growth may drop to around 1% only. He says “Costs are rising for many firms, with higher oil prices and rising wage demands, which makes them more nervous”.

However the most disturbing element is that firms are expecting prices to go up, yet profits fall, “increasing the risk of a worst-of-both-worlds outcome of weak growth but high inflation”.