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Business confidence has soared to the highest level since before Labor entered government in 2017, according to the latest ANZ Business Outlook Survey.
A net 9.4% of surveyed companies had a positive view of the economy, a huge improvement of 16 points over November, and the first time since August 2017 that more respondents were optimistic than pessimistic.
Meanwhile, a net 21.7% of respondents had an optimistic view of their own activity: an improvement of 13 points from November and the strongest result since March 2018.
ANZ chief economist Sharon Zollner said: “All activity indicators were higher. Inflationary pressure is increasing.
“Construction is manic. Agriculture, while improving, is still moderate.
“Manufacturers and retailers are hit the hardest by supply problems due to transportation disruptions, while manufacturers report the greatest difficulties in getting products to customers.”
Overall, Zollner said: “The New Zealand economy is showing impressive resilience. After a 14% bounce in the September quarter, the economy is the same size as before Covid.
“However, it does not have the same shape. Behind the numbers are some real tensions and tensions, both in overheated sectors such as construction and in cold sectors such as tourism.
“We expect a technical recession in Q4 and Q1 as the policy-driven rebound fades and the tourism hole hurts, although the looming outlook for travel bubbles is very encouraging.
But when it comes to the recent spike in growth, rising debt, whether public through fiscal policy or private sector debt, is not a sustainable source of growth. In particular, the rapid rise in house prices in this environment is absolutely concerning.
“If inflationary pressures continue to rise rapidly (albeit from low levels), that will cast doubt on the common assumption that mortgage rates will remain at lows for many years.
“But we should celebrate the fact that our economy will emerge from 2020 in a much better shape, cyclically and structurally, than most.”
