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New Zealand business sentiment slumps in April, led by gloomy builders

[WELLINGTON] New Zealand business confidence declined in April and sentiment in the construction sector slumped as it struggled to keep pace with demand amid soaring costs, an ANZ Bank survey showed on Monday.

The survey's headline measure showed a net 23.4 per cent of respondents expected the economy to deteriorate over the year ahead versus a 20 per cent pessimism level in the previous poll.

The construction sector suffered as firms struggled to cope with a labour shortage and higher costs that they could not fully pass on to customers.

"The construction sector stood out this month...its confidence plummeted; own activity plunged," said Sharon Zollner, chief economist at ANZ Bank. Construction firms' confidence dropped to a decade low as projections of activity growth fell to 3.8 per cent from 42.3 per cent.

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New Zealand is in the midst of a nationwide building crunch as it struggles to keep up with a fast-growing population and to repair earthquake-ravaged towns in the South Island.

Fletcher Building, New Zealand's biggest builder, has announced a series of cost blowouts in its commercial construction unit that have seen the company cancel its half-year dividend for the first time in its history and breach its finance covenants.

A net 17.8 per cent of respondents expected their own businesses to grow in the next 12 months, down from 21.8 per cent last month.

The New Zealand dollar edged down to US$0.7076 from US$0.7086 after the survey was published.