Wee gripes: Business confidence

Written By: - Date published: 12:30 pm, September 2nd, 2009 - 6 comments
Categories: business, Media - Tags:

Question: ‘Do you expect business conditions to improve in the next 12 months?’

Answer: ‘Well, we’re in the worst recession in a life-time but everyone says it’s coming to an end and our prospects are looking a bit better, obviously that’s going to be better than now – so, yes’

Headline: ‘Business confidence hits record high!’

The question is akin to being asked at midnight whether you expect it to be warmer in 12 hours’ time. Everyone’s going to say yes – doesn’t mean we’re going to have a scorcher.

Of course business confidence is at a record high, just as it was recently at record lows. That doesn’t mean we should look forward to strong growth. All that a big business confidence foreshadows is a large degree of change in the economic growth rate, not that growth is going to be fast. Yet the way the media reports it you would think that’s exactly what it means.

6 comments on “Wee gripes: Business confidence ”

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  1. ieuan 1
    2 September 2009 at 1:44 pm

    Marty G a business will only express ‘confidence’ if they feel that the market conditions are improving for them and that only comes about because they are receiving more enquiries for their products (or services) or are actually receiving more orders.

    It is a wee bit more than ‘we are at the bottom, the only way is up’.

    • snoozer 1.1
      2 September 2009 at 2:48 pm

      ieuan – aren’t you proving the point? confidence has gone up because business conditions are improving, not because they’re going to be great, hardly surprising consdering how bad things have been.

      • ieuan 1.1.1
        2 September 2009 at 3:32 pm

        I’m saying it is not just a ‘feeling’ but is slightly more tangible (enquires, forward orders etc).

  2. bobo 2
    2 September 2009 at 5:45 pm

    The same people that say the recession is over were the same people to said that we weren’t technically in recession early on, just the Cray Americans Bull market ass holes who constantly talk up the market because that’s all that matters, the perception, not the reality. The increased confidence here is due to the housing market picking up, so we are as screwed as the yanks if that’s the case… Until NZ is stopped being used as a international plaything of money markets our dollar will stay high for some time yet.

  3. luva 3
    2 September 2009 at 10:07 pm

    And so begins the lefts version of what Steve Pierson used to call the “NZ sux” campaign.

    Even good news has to have a negative spin

  4. gomango 4
    3 September 2009 at 3:04 pm

    Marty – Plot any of the consumer confidence surveys versus consumer spending. And any of the business surveys versus business spending/investment. They all show the same thing. And this isnt a rogue poll as you seem to be inferring – all surveys are showing a quite remarkable bounce in confidence levels. And I’ll bet you top dollar the peak in unemployment rates in NZ won’t be a new record for NZ.

    And also confidence surveys are generally reported as a diffusion index, as long as the survey methods are statistically robust, the index does give meaningful relative and absolute indications about the future state of the economy.

    All this nascent recovery proves is that recession and growth generally is independent of what bunch of tossers are in power. And whats with your analogy? Are you assuming that survey respondents can pick future business conditions with the same certainty as they can assume that day follows night?