Activity, employment and investment expectations all remained healthy.
The outlook, released yesterday, showed optimists continuing to outnumber pessimists.
Firms remained upbeat. A net 18% of businesses were optimistic about the year ahead.ANZ chief economist Cameron Bagrie said that was down slightly on July but in seasonally adjusted terms, business confidence lifted from 27 to 30.A net 38% of businesses expected better times ahead for their own business.
"This is a key measure that maps well to economic growth. Although down two points in August, it’s polling high."
The long-run average was 28. Adjusting for seasonality, firms’ own activity expectations lifted from 45 to 46, he said.
A net 23% of firms were expecting to lift investment, unchanged from July.
Employment intentions pulled back from 26 to 17, the lowest reading in more than a year.
Profit expectations lifted from 25 to 29 and Mr Bagrie said investment usually followed profitability.
Residential construction intentions popped from 11 to 36 and commercial construction intentions rose from 6 to 29.
Firms’ pricing intentions waned from 28 to 21 and inflation expectations dipped from 2% to 1.9%, slightly ahead of the current rate of 1.7%.
A net 40% of businesses still expected interest rates to rise although that was the lowest reading in nine months, he said.
A net 23% of businesses expected it to become tougher to get credit.
"We’re seeing healthy readings for confidence, activity, expectations, profitability, investment and employment across all sectors and regions. That’s a broad-based economic expansion in operation."
The confidence composite indicator was pointing to annual gross domestic product (GDP) growth of more than 4%. The difficulty in finding skilled labour and sub-par productivity growth put that out of reach in practice, Mr Bagrie said.
Real GDP growth of about 3% was far more feasible.
There was grassroots support from the agricultural sector. While the sector’s headline confidence dipped in August, it remained the most optimistic sector in terms of business confidence and the activity outlook.
The reason was not too hard to spot, he said. Commodity prices were up 21% on a year ago and up 18% year-on-year in New Zealand dollar terms.
As the business cycle evolved, the economic drivers changed. As housing, the construction sector more broadly, tourism and net migration appeared to be reaching their peak, other growth drivers such as record high terms of trade, a fiscal impulse and buoyant household income were stepping up.
