7 Oct 2015

Caution urged in survey interpretation

7:24 pm on 7 October 2015

One analyst is less than convinced by the New Zealand Institute of Economic Research (NZIER)'s latest survey of business opinion.

Business confidence has continued to wane according to the Institute of Economic Research.

The latest NZIER survey has shown businesses' confidence in the economy is at a near five-year low. Photo: PHOTO NZ

The survey for the September quarter was generally greeted as showing the economy in reasonable shape despite a background negative mood.

The net measure of confidence fell to a near five-year low with pessimists outnumbering the optimists.

However, it was the other way around when businesses were asked about their own outlook, with indications firms would be hiring more staff and investing more in plant and machinery.

Deutsche Bank chief economist Darren Gibbs said the economy was performing poorly, and the NZIER survey should not be over-interpreted.

"We have had policy easing and we've had a significant reduction in the currency and dairy prices have bounced off the lows.

"But is it a survey which suggests to me that the economy's about to go back to above-trend growth? No. Is it a survey which suggests that the unemployment rate will decline? No. Is it a survey which suggests we'll see inflation outside of that transmitted through a lower currency? No," he said.

"So, for me - a better survey than it might have been but certainly not a good survey."

Meanwhile, HSBC chief economist Paul Bloxham, who caused some excitement last year when he dubbed New Zealand the rock star economy, now said the economy was getting back to a more normal rate of growth, which would put it into the middle of the pack of developed countries.