Matt Nolan

September 2008 business confidence

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National Bank consumer confidence has come out and (August here):

First positive result since May 2002.  Own-activity expectations are rising.  Capacity utilization is climbing.  Profitability is climbing as cost pressures have eased.  Employment intentions have improved (consistent with returning capacity pressures).  Inflation expectations are still high – but the fall in cost growth has pushed it down in September.

Interestingly, the biggest rebound in confidence was in construction – the same sector that has reported a historically poor set of results over the three months to August on Tuesday.

We are not immune from the global slowdown, but just remember the two main channels the credit crisis will get us through:  Interest rates and our terms of trade.  These are the two factors we need to keep an eye on, and I can’t see them deteriorating enough to prevent a mild recovery in the domestic economy over the rest of the year.  But we’ll see.

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