New Zealand’s business confidence rose to a 12-month high in May as record-low interest rates and higher commodity prices bolster the prospect for an economic recovery from the nation’s deadliest earthquake in 80 years.
A net 39.7 percent of companies expect their sales and profits to increase over the next year, the highest since May 2010 and up from 29.5 percent in April, a survey by ANZ National Bank Ltd. released in Wellington today showed. The net figure subtracts the number of pessimists from the number of optimists.
Confidence has been recovering from the Feb. 22 earthquake in Christchurch, which caused sentiment to plummet in March by the most since the global financial crisis in 2008. Exports rose to a record in April, bolstering the income of farmers and adding to the case for growth to accelerate later this year.
“The economic patient is beginning to show real signs of life,” ANZ National Chief Economist Cameron Bagrie said in an e-mailed statement.
New Zealand’s dollar, known as the kiwi, was little changed at 82.31 U.S. cents at 1:10 p.m. after rising to 82.43 cents, the highest since exchange-rate controls were lifted in 1985.
ANZ National’s composite growth indicator suggests the economy will grow 4.5 percent over the next 12 months, Bagrie said. The Treasury Department this month forecast growth of 2.5 percent in the year ending June 30, 2012.
A recovering economy adds to signs central bank Governor Alan Bollard may raise interest rates from a record-low 2.5 percent later this year. There is a 92 percent chance of a quarter-point increase by December, according to swaps trading after the release.
A net 15 percent of companies expect to increase investment in the next year, compared with 6.1 percent in April, today’s survey showed. A net 13 percent intend to boost employment, compared with 5.9 percent in the March survey. A net 23 percent expect higher profits.
The measure of overall confidence in the economy also rallied, with a net 38.3 percent of the 433 companies surveyed expecting the economy will improve over the next year, up from a net 14.2 percent in March.