Business gloomy in New Zealand

http://www.interest.co.nz The National Bank's survey of business confidence for March has found businesses intentions about their own activity have crashed to their lowest levels since April 1991, which was right in the middle of a recession when unemployment hit 10.9%.This is a shocking result and reflects the widespread concerns about higher interest rates for businesses and consumers, the slump in the housing market and fears about a US recession hitting the global economy.The National Bank said firms expectations about their own activities turned negative for the first time since early 2006. A net 6% expect a deterioration in their own businesses, which was down from a net positive of 2% last month.This is interesting because firms expectations about themselves are seldom negative. There is something of a dual personality at work here. Firms are often pessimistic about the economy as a whole, but are relatively optimistic about themselves. A net 58% expect business conditions overall to deteriorate, which is up from 44% last month.Now firms are pessimistic about everyone, including themselves.Employment, profit expectations, and investment intentions were all down, the National Bank said. "Employment intentions have now been negative for 2 successive months, portending of a considerable softening in labour demand," it said, adding: "Ominously, export intentions have fallen to levels seen during the Asian crisis of 1998.""The survey is telling us four things about the economy. First, growth looks to have stalled but is more likely to be negative in the March quarter. Second, our composite growth ndicator (which includes activity, investment, and employment intentions) is giving a very ininviting reading on growth prospects looking forward over the coming year. Third, in the regard to momentum, the pace of growth is slowing very quickly. Finally, the construction sector is leading the slowdown, with the industry most pessimistic across activity, employment, profits, and investment." The National Bank said residential investment intentions were at an historic low of 46% expecting a deterioration."Before we wrap ourselves in further palls of gloom, and talk ourselves into the dreaded "R" -- which is appearing across commentary -- we need to be realistic. It's called a business cycle," National Bank chief economist Cameron Bagrie said. "We've been here before. Night follows day, and day follows night. The sun invariably comes up in the morning."