Business confidence is still falling

… no matter what Jacinda says …

Stuff reports that business confidence continues to fall, no matter how much the government tries to talk it up. quote:

Business confidence has continued to fall, with companies reporting a decline in profits and demand in recent months.

The quarterly survey of business of business opinion (QSBO) showed that a net 28 per cent of businesses were downbeat about the general economy, a seven point fall since June. end quote.

The jump in GDP, reported last month, was a boost to the government, which has since tried to use it as an indicator that everything in the economy is just fine. Trouble is, it takes time for economic indicators to move, particularly as export orders can be placed months in advance, so the good June quarter result may well have still been an overhang from the better economic times under the previous government.

And you can bet your sweet life that neither Jacinda nor Grant Robertson will ever admit to that. quote:

Although the general business confidence measure is highly influenced by a change in Government, the survey also showed another fall in domestic trading, which tends to be a much more accurate guide to how the economy will perform.

As many businesses reported a fall in trading over the past three months as the number reporting an increase, with a net 0.4 per cent positive score, the lowest by that measure since September 2012. end quote.

In 2012, we were just coming out of the GFC. quote:

Undertaken by the Institute of Economic Research since 1961, the QSBO is regarded as the leading survey of its type.

While the key measures in the latest survey are more upbeat than the monthly ANZ business outlook,  the September QSBO shows a continued decline in most measures compared to June.

Christina Leung, principal economist at the Institute of Economic Research, said irrespective of who was in Government, the own activity measure tended to be a good guide to economic growth.

The survey suggested economic growth would fall to 2 per cent in the year to September 30, Leung said.

Profitability continued to drop, with a net 23 per cent reporting a fall in profits in the past quarter. end quote.

The last GDP figures were for the June quarter, and are already out of date. All the other indicators still seem to suggest that the economy is in decline and that confidence has fallen markedly in the September quarter. quote.

Business owners indicated they were less likely to take on staff or invest in new plant or buildings.

“We’re likely to see this continue if profitability continues to decline,” Leung said.

Manufacturing overtook retail as the most downbeat sector. end quote.

Christmas looms for the retail sector, which is, of course, its best time of year. Once the New Year has started, however, things will be bleak again in that sector too. quote:

“The…survey contained some very weak details which confirms that economic activity has likely decelerated heading into the second half of 2018,” ASB senior economist Jane Turner said. There was “some risk of a sharp slowdown in the labour market” over the September quarter, Turner added. end quote.

It looks like 2019 is going to be a very bad year for the economy. Watch unemployment start to rise, and once that happens, it is game over. How will Labour and the Greens pay for their social programmes, or splash money around the Pacific (or around New York) if there are not enough taxpayers to foot the bill?

 


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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

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