New Zealand's NBNZ Business Confidence rose to 34.2 in August, the highest in over a decade. However, as we noted in our New Zealand Dollar Weekly Forecast, improvements in the headline figure may be misleading. The higher reading implies that optimists are outnumbering pessimists by an increasingly wider margin among polled survey respondents, but this is no tall order considering the New Zealand economy has been shrinking for six consecutive quarters and could prove to be flimsy evidence of a sustainable recovery in economic growth. Put another way, the relative improvement in firms’ optimism is more so a factor of the sharp declines in the recent past rather than a meaningful surge in confidence about the future.
