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New Zealand Firms Scale Back Hiring, Investment, Survey Shows

Sept. 30 (Bloomberg) -- Fewer New Zealand companies are optimistic about the economy and firms are scaling back hiring and investment intentions, according to a survey.

A net 14 percent of companies surveyed this month expect the economy will be stronger in a year’s time, down from 16 percent in August, according to ANZ National Bank Ltd. The net figure subtracts the number of pessimists from optimists.

Falling hiring and investment intentions add to signs that economic growth will remain weak after gross domestic product expanded just 0.2 percent in the second quarter. Central bank Governor Alan Bollard this month kept borrowing costs unchanged and lowered his growth forecasts.

“The message is clear, businesses consider themselves to be in a hold pattern,” Cameron Bagrie, chief economist at ANZ National in Wellington, said in an e-mailed statement. “A real danger at present is that declining confidence or overly cautious stances become self fulfilling.”

The survey of 506 firms showed a net 26.7 percent expect their own business activity to improve, up from 25.7 percent in August. Still, adjusting for seasonal factors the measure fell to 19 percent from 28 percent, Bagrie said. The direction is clear, he said.

The number of firms planning to hire workers about equaled those who may fire staff, and a net 1.9 percent intent to increase investment, the survey showed.

“In this situation, the Reserve Bank has scope to take a supportive stance by keeping interest rates low,” Bagrie said.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net

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