[ad_1]
One cluster of numbers suggests that the economy may be doing better than expected despite the Covid-19 resurgence and the re-imposition of some travel restrictions.
Photo: RNZ / Dom Thomas
ANZ Bank’s preliminary look at business sentiment for September showed an improvement in sentiment, with companies markedly less pessimistic about the overall outlook for the economy, falling to a net negative 26 percent from 41.8 percent in August.
The most closely followed measure of business sentiment about their own future improved 8 points, with 10 percent net expecting conditions to worsen next year.
“I was quite surprised by its strength, I must admit that we did see some resistance in the last month in the sense that the data after Covid returned did not slide much, but seeing it revert to an increase is actually quite remarkable,” ANZ said chief economist Sharon Zollner.
She said large-scale fiscal stimulus, such as the government wage subsidy, had been advanced during the recession, which was fueling optimism.
Export, employment and investment intentions among companies also improved significantly from August levels.
“Surprisingly, only a net 1 percent of companies expect to reduce investment, while a net 14 percent intend to reduce employment. Again, these indicators are far from their lows, but still far below from pre-Covid levels, “Zollner said.
Cargo reaches traffic jams
However, ANZ’s tracking of cargo movements showed that economic activity fell during August as regional travel restrictions disrupted activity.
The bank’s monthly Truckometer Index uses transportation movements as a guide to the economy.
Photo: 123RF
The heavy traffic indicator, which is a real-time snapshot of what is happening, fell 6.5 percent in August.
Zollner said the August traffic data did not necessarily reflect what was happening in the economy as it was skewed by regional hurdles.
Record sales don’t fall as badly as feared
And two of the final pieces of the second-quarter growth outlook showed record declines for wholesale activity and manufacturing sales.
Stats NZ said the lockdown caused sales in both areas to drop billions of dollars.
Wholesale sales fell nearly 10.9 percent and manufacturing volumes were down 12.2 percent in the three months ending June from the previous quarter.
Fuel use and sales were among the categories that declined the most as processing fell to record lows amid low global oil prices and severely reduced demand.
But grocery, food and liquor sales remained strong and dairy and meat processing drove manufacturing volumes.
The figures are among the last pieces of the economic growth calculation for the March-June quarter, to be released next week.
ASB Senior Economist Jane Turner said the data was encouraging because it suggested that the economic costs of additional Level 3 and Level 2 restrictions to handle outbreaks might not be as high as previously thought.
“We have revised our preliminary second-quarter GDP (gross domestic product) forecast to a drop of 11 percent from -13 percent previously.”
