N.Z. Businesses Become Optimistic for First Time in 8 Months

By Tracy Withers

May 27 (Bloomberg) -- New Zealand businesses become optimistic for the first time in eight months in May as a drop in borrowing costs buoyed the outlook for profit and hiring.

A net 3.8 percent of companies surveyed expect sales and profit will rise over the next 12 months from 3.8 percent expecting a decline in April, according to a report released by ANZ National Bank Ltd. in Wellington today. The net figure subtracts the number of pessimists from the number of optimists.

Fewer businesses said they plan to reduce workers and cut capital spending, adding to signs the economy may recover later this year from the worst recession in more than three decades. Reserve Bank Governor Alan Bollard last month cut the benchmark interest rate to a record low of 2.5 percent and said he was unlikely to raise borrowing costs until late 2010.

“We fully expect the economy to regain forward momentum in the second half,” said Cameron Bagrie, chief economist at ANZ. “The recovery will likely remain patchy.”

New Zealand’s dollar rose to 62.19 U.S. cents at 3:15 p.m. from 62.09 cents immediately before the report was released.

A net 1.9 percent of companies surveyed expect the broader economy will improve compared with 15 percent expecting deterioration in the April survey.

Sixteen percent of companies plan to fire workers this year, compared with 19 percent in April, the survey showed. The ratio of companies expecting reduced profits dropped to 24 percent from 30 percent.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.