May 31, 2018 / 2:26 AM / 19 days ago

UPDATE 1-NZ business activity outlook hits 6-month low, led by gloomy construction sector

WELLINGTON, May 31 (Reuters) - New Zealand businesses downgraded their activity forecasts to a six-month low in May, weighed by struggles in the construction sector, a survey out on Thursday showed.

Firms’ outlook for their own activity edged down to 13.6 percent, the lowest since November, from 17.8 percent the previous month, the ANZ Bank survey found. A net 27.2 percent of businesses expected the economy to deteriorate in May, deepening from 23.4 percent the previous month.

The ANZ index readings are calculated as the percentage of respondents expecting improvement minus the percentage expecting a deterioration.

The dip in confidence and activity forecasts was consistent with the Reserve Bank of New Zealand’s view that it would keep rates on hold, possibly for years.

The New Zealand dollar edged down to $0.6874 from around $0.6986 after the survey was came out.

The construction sector, previously a powerhouse behind the country’s robust economic growth, saw its own activity at just 4 percent and profitability expectations fell to the lowest levels since 2009.

“The construction industry is clearly facing significant challenges,” ANZ chief economist Sharon Zollner said in a statement.

The building industry has been mired in labour shortages and rising material prices that have seen major firms such as Fletcher Building struggle with cost blowouts even as the country experiences a building boom. (Reporting by Charlotte Greenfield Editing by Eric Meijer)

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