New Zealand Businesses Were More Optimistic in June

By Tracy Withers

June 30 (Bloomberg) -- New Zealand businesses were more optimistic in June amid a drop in borrowing costs and signs of a global recovery that may bolster exports.

A net 8.3 percent of companies surveyed expect sales and profit will rise over the next 12 months compared with 5.5 percent in May, according to a report released by ANZ National Bank Ltd. in Wellington today. The net figure subtracts the number of pessimists from optimists.

More businesses say exports will improve while profit expectations are up among retailers and manufacturers, adding to signs the economy may recover later this year from the worst recession in more than three decades. Reserve Bank Governor Alan Bollard said on June 11 he expects to keep the benchmark interest rate at a record low of 2.5 percent until late 2010.

“The economy continues to contract, but the positive spin is that the pace of contraction is occurring at a slower rate,” said Cameron Bagrie, chief economist at ANZ National Bank.

A net 5.5 percent of the 402 companies surveyed expect the broader economy will improve compared with 1.9 percent in the April survey.

Eleven percent of firms say exports will pickup compared with 5.8 percent in April amid signs of a recovery in global markets. Japan’s industrial production climbed 5.9 percent in May, matching a gain in April that was the fastest since 1953, a report yesterday showed.

Still, New Zealand firms remain pessimistic about profits, investment and the labor market, today’s survey showed.

Seventeen percent of companies plan to fire workers this year, compared with 16 percent in May. The ratio of companies expecting reduced profits was unchanged at 24 percent. A net 5.6 percent expect to cut investment over the next year.

ANZ said its composite growth indicator based on profit, hiring and investment intentions remains negative and the labor market outlook is “particularly poor.”

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