Wellington. New Zealand business confidence sank to a seven-month low in June, a survey by ANZ Bank showed on Wednesday (27/06), reinforcing recent signs the country's economy was losing some of its gloss after years of strong growth.
The survey's headline measure showed a net 39 percent of respondents expected the economy to deteriorate over the year ahead in June, from 27.2 percent the previous month.
That was the most pessimistic level since the measure took a dive in November to an eight-year trough on jitters around the center-left Labour-led government taking the helm and ending almost a decade of center-right National Party rule.
The New Zealand dollar fell to a seven-month low of $0.6817 on Wednesday from around $0.6843 before the survey was released.
Firms' own activity outlook remained positive but fell to 9.4 percent from 13.6 percent the previous month.
"This is starting to look worrying though I suspect some will be seasonal," said Cameron Bagrie, an economist at Bagrie Economics, adding that business confidence tended to weaken in winter. "The economy is now clearly tracking around 2 percent and not 3 percent."
New Zealand's gross domestic product (GDP), the envy of the developed world in recent years, has slipped since late last year. The economy notched growth of 0.5 percent in the first three months of the year, compared to an average of 0.9 percent since 2014.
Growth has been hit by a cooling housing market, a skilled labor shortage and easing immigration from record highs.
Firms named their biggest problem in the ANZ survey as lack of skilled employment and government regulation as the second most important problem.
New Zealand has been struggling with a skilled labor shortage, which is particularly acute in the building sector, which the government estimates is short 30,000 skilled workers. On Wednesday, in an effort to address the problem, the government announced fast-tracked visas for workers from offshore.
The result will be discouraging news for the Reserve Bank of New Zealand which is set to review policy on Thursday and is widely expected to signal it would keep the official cash rate (OCR) at a record low for some time yet.
"The longer business confidence remains low, the more questions that will be raised over the economic outlook. An OCR cut cannot be ruled out if this persist," said Mark Smith, senior economist at ASB Bank.