New Zealand business outlook and demand weakens in Q4

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FILE PHOTO - Construction workers unload equipment at a building site for a residential apartment block in central Wellington, New Zealand

WELLINGTON – New Zealand business confidence and demand dropped in the fourth quarter of last year as the COVID-19 outbreak dragged on, a private think tank said on Tuesday.

A net 28.0% of firms surveyed expected general business conditions to deteriorate compared with 11% pessimism in the previous quarter, the New Zealand Institute of Economic Research’s (NZIER) quarterly survey of business opinion (QSBO) showed.

On a seasonally adjusted basis, 34.0% expected business conditions to worsen, versus 11.0% pessimism recorded in the previous period. The survey’s measure of capacity utilisation dipped to 89.5%, from the previous quarter’s 96.1%.

Acute labour shortages triggered by pandemic restrictions are underpinning a lift in wage growth and this is contributing to higher costs for business, NZIER said in its report.

A net 61% reported increased costs in the December quarter, the highest level since June 2008, it said.

Inflation pressures are accelerating, the report said, suggesting a continued tightening of monetary policy by the central bank.

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(Reporting by Praveen Menon; editing by Howard Goller)