Our monthly survey of the confidence of Weekly Overview readers has produced a decline for the third month in a row with sentiment now at the level of April last year. Only a net 2% of the 542 respondents expect the economy will get better over the coming year down from 26% in June and a peak of 56% in September last year.
The easy thing to say would be that the reality check on optimism following evidence of avoidance of a Depression scenario is continuing. But reading through the commentaries there is something more in play. Whereas the decline in confidence from October to recently could easily be put down to people getting more realistic, now there seems to be more an element of the actual economy not turning out to be as good as they thought, as good as some commentators have been saying, or as good as one might think with the Reserve Bank raising interest rates.
In fact many respondents volunteered an opinion that the Reserve Bank was wrong to raise the official cash rate. Not many however have expressed concern this month about the exchange rate, and far fewer noted worries about events offshore. The decline in sentiment appears very much tied to a general lack of customers stretching across many sectors from retailing to residential real estate and transport.
With regard specifically to residential real estate the over-riding themes are vendors still not being realistic in their price expectations, buyers being very cautious, and those who do not have to sell keeping their property off the market and producing a growing shortage of listings.
For individual industries responses can be broadly be summarised as follows.
Accountancy
Possibly the most negative set of comments ever received from this particular group.
Advertising & Marketing
Signs of companies choosing to boost their marketing spending.
Agriculture - Dairy generally good, sheepmeat and beef as bad as is their normal position with regard to cash flows. Spending by most being kept under tight control with debt levels being cut where possible.
Civil Construction
Good levels of activity except for normal Winter weakening it seems.
See the individual comments and graphs. More>>
Signs of some improvement in activity but from a low base and with severe margin pressure. Overall fairly negative commentaries dominate.
Forestry/Manufacturing/Sawmilling
Reasonable activity levels it appears but some exchange rate concern and wary eye on US market.
Human Resources
Improving client demand.
Information Technology/Telecommunications
Pick up in activity underway.
Legal
Striking correlation with accountants in terms of perhaps the most negative set of comments from this sector ever received.
Manufacturing
Always a very mixed bag but generally it seems demand is rising but margins are very compressed. This implies that the high capacity use reading we see in the NZIER’s regular survey is not the experience on the ground.
Property Management
Very divergent rental commentaries, no indication of people bailing out.
Real Estate – Non-residential
Overwhelmingly weak. Finance perceived as hard to get.
Real Estate – Residential
Comments largely neutral or negative. Buyers in no rush and being cautious. Vendor price expectations too high but only listing when they really need to, so listings are becoming in increasing short supply.
Real Estate – Rural
Very quiet still.
Retail
Fairly ugly actually going by the comments. Buyers still very hesitant and looking for specials for large items.
Tourism and Travel
Patchy overall except the inward Aussie market which remains firm.
Vehicles & Automotive
Still extremely challenging.
See the individual comments and graphs here >>
Previous Confidence Surveys
April 2010 >>
March 2010 >>
February 2010 >>
December 2009 >>
