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NZ business confidence eases in June - NBNZ
Reuters - Monday, June 28
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* Businesses' own outlook and headline measures dip
* Inflation expectations rise to highest in 18 months
* Survey seen pointing to around 4 percent growth
WELLINGTON, June 28 - New Zealand businesses were less confident about their own outlook and that of the broader economy in June, backing views the central bank will be cautious and gradual in raising interest rates.
The National Bank of NZ's monthly business outlook showed on Monday a net 38.5 percent of companies expected their own business to improve in the next 12 months, compared with a 45.3 percent optimism level in the May survey, which was an 11-year high.
The survey's headline measure of sentiment showed a net 40.2 percent of respondents expecting the economy to improve over the next 12 months, compared with a net 48.2 percent a month earlier.
"We'd characterise this month's move as shifting from a gallop to a canter," National Bank of NZ chief economist Cameron Bagrie said in a statement.
The report showed decline in most of its indicators, with employment and investment intentions, export and profit outlooks all moving lower, while inflation expectations for the year ahead rose to 3.10 percent, their highest since December 2008, from 2.69 percent in May.
A net 39 percent of respondents also planned to raise their prices, which NBNZ said anticipated the rise in the value-added goods and services tax due to come into effect on Oct. 1.
Market reaction to the survey was muted, with the NZ dollar <NZD=D4> steady at around $0.7115 and interest rate futures <0#NBB:> also unmoved.
The NBNZ survey is taken as an influential forward-looking indicator of economic activity and a factor in the central bank's monetary policy thinking.
The Reserve Bank of NZ earlier this month raised its cash rate by a quarter percentage point to 2.75 percent after holding rates steady at a record low for a year to counter recession.
The number expecting higher interest rates was little changed at 78.4 percent.
The RBNZ reviews rates next on July 29, when all analysts surveyed by Reuters expect a 25 basis point rise. [NZ/POLL] Market pricing puts an 80 percent chance of a hike, according to a Credit Suisse measure <CSRBNZ=CSAU>.
"Our composite growth indicator from the survey is still consistent with positive growth ahead, and is pointing towards year-on-year growth of above 4 percent by the end of this year," Bagrie said.
Data last week showed the economy grew 0.6 percent in the first quarter. Forecasts are for the economy to grow 3.5 percent a year over the next two years.
The NBNZ survey was the first taken after both the government budget, with its wide ranging tax changes, and the forecast higher payout by dairy giant Fonterra's, the country's biggest company and export earner.
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