28 Jun 2013

Rise in dollar after surge in business confidence

2:37 pm on 28 June 2013

The New Zealand dollar jumped more than 0.5 US cents after news business confidence surged to its highest level in years in June and just about all industries are upbeat.

The currency rose from 77.93 US cents at 8am on Thursday to US78.19 cents at 5pm.

The ANZ's monthly business confidence survey shows the number of companies which expect general business conditions to get better over the year ahead rose eight points to a net 50% compared to May.

The bank said confidence has soared to a level it touched briefly in early 2010, but otherwise hasn't been experienced since the late 1990s.

And firms remain positive about the prospects for their own business with a net 45% expecting improved conditions for themselves over the year ahead.

ANZ economist Steve Edwards said optimism is widespread and construction is leading a number of the indicators within the survey such as profit expectations, employment and investment.

He said the rebuilding of Christchurch is underpinning the positive construction outlook, but it will take a number of years and a labour force is needed there to do that work.

Looking ahead, Mr Edwards said there could be a problem with ensuring that resources are available in the areas where they are needed.

He said combining business confidence with consumer confidence gives a more robust picture of where the economy is headed over the next 12 months or so.

"When we combine those two indicators we're looking at economic growth approaching 4.5% by the end of the year, so certainly it's gone from a patchy period of growth to something quite strong for New Zealand over recent times."