// REGIONAL ROUND-UP //

AFRICA | APAC | EUROPE | MIDDLE EAST | NORTH AMERICA

A net 31 % of firms reported a decline in activity in their own business in the September quarter . Meanwhile , only a net 2 % of firms are expecting weaker activity in the next quarter . The start of the easing cycle in the OCR by the Reserve Bank of New Zealand ( RBNZ ) since the August Monetary Policy Statement and expectations of lower interest rates for the coming year appear to have supported this sharp improvement in sentiment about the outlook ahead , despite demand remaining weak for now .

Retailers are feeling most positive about the outlook ahead

The improvement in sentiment is most evident in the retail sector . Despite orders , sales and profitability remaining weak in the September quarter , a net 13 % of retailers surveyed are feeling positive about the general economic outlook for the coming months . A net 8 % of retailers are also expecting domestic demand to improve in the next quarter .

A small proportion of services sector are also feeling positive about the general economic outlook ahead , reflecting expectations of lower interest rates over the coming year . While the current weak demand environment has driven a further easing in the pricing power of services , sector firms and staff headcounts in the sector had reduced in the September quarter , a net 8 % of services sector firms expect demand to pick up in the next quarter . This optimism in the retail and services sectors reflects the expectations that the impact of lower interest rates will be felt more in the household sector .

In contrast , the manufacturing sector was the most downbeat , with a net 37 % of the manufacturers surveyed feeling pessimistic about the general economic conditions over the coming months . This pessimism continues to be driven by the weak demand and profitability facing the manufacturing sector . However , a significant proportion of manufacturers are expecting a recovery in demand in the coming quarter .

The building sector was also downbeat , although to a much lesser extent compared to the June quarter . The weak demand facing the building sector continued to reduce firms ’ pricing pressures while cost pressures remain intense , resulting in a further deterioration in profitability . The measure of architects ’ work in their own office points to continued weakness in the pipeline across housing , commercial and government construction work for the 12 months ahead . This is in line with the consent issuance data , which also suggests a soft pipeline of construction demand over the coming year .

Pricing pressures eased sharply in this weak demand environment

There was a slight increase in the proportion of firms reporting higher costs in the September quarter . However , the pricing indicator shows that only a net 3 % of firms were able to raise prices to pass on costs , which was a sharp fall from the net 23 % in the previous quarter . �

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