20 Jan 2015

Business confidence steady

1:08 pm on 20 January 2015

Business confidence has held steady, after experiencing declines in the middle of last year.


Photo: AFP

The Institute of Economic Research's December quarterly survey of business opinion found optimists outnumbered pessimists, with a net 21 percent of firms expecting economic conditions to improve in the next six months.

Firms' own trading activity, which the Institute said closely mirrored economic growth, rebounded from 15 to 20 percent, consistent with annual economic growth of between 3 and 3.5 percent.

Principal economist Shamubeel Eaqub said profitability was patchy, though the recovery was encouraging firms to hire more people.

Mr Eaqub said the improving economy was still not generating inflation pressures.

"Very much a Goldilocks survey. Activity is picking up, there are more jobs, but not many inflationary pressures.

"This is just the right mix the New Zealand economy can handle."

But Mr Eaqub said the recovery remained uneven.

"This has been the story of this recovery. When one thing picks up, something else seems to drop off," he said.

"We just can't seem to get into this pattern of synchronised economic recovery, which is what we have observed in the past. And this patchiness means that while one bit of the economy might be creating say more jobs or more wage increases or more price increases, the rest are not.

"In aggregate, what we continue to see is a fairly moderate kind of economic recovery."

With inflation pressures remaining subdued, Mr Eaqub is picking the Reserve Bank will not lift interest rates until early next year.