6 Sep 2011

Survey suggests firms holding off till after RWC, election

7:00 am on 6 September 2011

A survey of business sentiment suggests firms may be putting investment and hiring plans on hold while the Rugby World Cup takes centre stage.

The BNZ confidence survey of 531 respondents shows a net 36% expect the economy to be in better shape in a year's time, compared with a net 22% in August.

BNZ chief economist Tony Alexander attributes the sharp pickup in confidence to the improving New Zealand economy, and says it should translate into improved hiring and investment.

But Mr Alexander says those plans are being somewhat sidelined by the impending Rugby World Cup. Firms are indicating, he says, that some of their clients are pulling back and putting a few decisions on hold.

Once the Rugby World Cup tournament ends, he points out, there are just four weeks to an election, which could persuade business to delay hiring and investment decisions until next year.

Mr Alexander also says there's "a lot of confusion" in the tourism sector about what impact the RWC will have.

He expects the Reserve Bank to raise the official cash rate in December, but he says it could be sooner if the international situation settles down.