‘Remarkable turnaround’ in confidence

Businesses are largely optimistic about the future for the first time since Covid-19 emerged.

ANZ’s preliminary monthly survey for October, titled "Party like it’s 2019", shows businesses have reported improving confidence in their markets.

The responses come as Auckland and the rest of the country got closer to a return to regular life thanks to decreasing alert level restrictions and stronger signs the second community outbreak of Covid-19 has been controlled.

ANZ said businesses reported headline sentiment at a net -14.5%, which is 14 points up from the month earlier.

And the more closely followed measure of how firms feel about their own future returned to the highest level since February, a net 4% expecting business to improve in the next 12 months.

"A read of 4% still doesn’t count as strong, but it’s a remarkable turnaround from -55% in April, and higher than a year ago," ANZ chief economist Sharon Zollner said.

"I think it’s fair to say we have got some tailwinds behind us, particularly fiscal and monetary ones, which have definitely been helping the recovery from the disruptions from the lockdowns."

Despite the turnaround, some tests lay ahead for the economy, Ms Zollner said.

"There’s going to be a little bit of a perfect storm as the end of the year approaches. For one thing, that massive fiscal support through the wage subsidy is going to wind down; the mortgage deferral scheme, the first run of that is coming to an end; and tourism is highly seasonal, so the cash-flow impact of that are a summer story and lie in front of us as well."

The economy was also going to feel the effect of lost migration, as borders remained closed, she said.

The preliminary result found investment intentions were unchanged, but employment intentions lifted nearly nine points, only a net 3% of firms saying they were planning to cut jobs over the next year.

Businesses in the South

In Dunedin, Hammond & Campbell Builders downed tools during the Alert Level 4 lockdown in March and April with little certainty as to when the company would get back to work.

"Yes of course [we] had some negative feelings," director Toby Hammond said.

"There was just so much unknown. You didn’t know when you were going to get back to work."

But since then construction in the city had been booming, Mr Hammond said.

Things were "busier than they’ve ever been, to be honest".

"In Dunedin things were busy before Covid but they’ve actually got busier since we’ve come back and everyone I’ve talked to in the trade has said the same thing."

Harbour Fish has recently gone through a refit of its store in Dunedin and owner Aaron Cooper’s confidence is split two ways.

"Business wasn’t what it was.

"Domestically, we’re travelling OK in retail. Obviously, wholesale business to restaurants and things like that is down due to lockdowns and no tourists inside the country."

The company’s export business was being restricted to some parts of the world, but it was able to continue to other parts.

In Queenstown, Life Pharmacy Wilkinsons owner Glenn Mitchell said his and other downtown businesses were struggling to recover after the borders were closed to overseas tourists.

"Domestic tourism is probably not enough, especially for the downtown of Queenstown.

"For businesses downtown, any tourism business, having overseas borders opening — even if it’s just Australia to start with — is going to be critical."

It had been helpful to see a clear pattern of customer behaviour after the disruption caused by Covid-19 earlier in the year.

"At the start of Covid there was a lot uncertainty about what it was going to look like.

"There’s still a lot to manage and we’re still a long way off what we personally need the business to be functioning at."

The owner of Oamaru’s Shortblack Cafe, Caidee Pennycook, said her business had enjoyed a lot of local support and that was keeping her spirits up.

"At the start [of the lockdown] I was kind of worried ... I only bought the business in December.

"People are supporting local. They don’t want to lose another business."

The future looked bright with a continued focus on locals.

"I think we’ll do quite well because we’re mainly local-based. We’re one of the cafes that have ... a lot of regulars that come every day.

"I think it’ll continue going well ... I’m not worried about it." — Additional reporting RNZ