The confidence of businesses and employees alike has improved on the back of recent positive economic data and New Zealand's housing and construction sector - but more pain is expected from rising unemployment.
Better times ahead are expected by almost 50% of respondents in the National Bank's monthly business outlook survey, not seen since 1999, when the economy started recovering from the Asian crisis, National Bank, ANZ-National Bank senior economist Cameron Bagrie said yesterday in a statement.
"There is no doubt housing and construction remain at the forefront of the improvement in confidence, although sentiment is clearly diffusing through the wider economy," he said.
Companies own activity expectations were up by 6% to 32% while profit expectations were up by 1% to 8%.
He said while export intentions were down, that sector was "resilient" in the face of the high New Zealand dollar, noting the "up tick" in commodity prices in recent months with the ANZ world commodity price index up 12% from its February lows.
Mr Bagrie said employment intentions of businesses, coming off an 18-month record losing streak and "precipitous lows", now saw 2% of businesses expecting to employ more staff in the year ahead.
In separate data released yesterday, the Westpac McDermott Miller employee confidence survey found conditions were still "extremely tough", economist Donna Purdue said in a statement.
"We expect the unemployment rate to continue to push higher in the September quarter and wage growth to slow further," she said.
Better-than-expected economic news in recent months, both globally and in New Zealand, would contribute to improving labour market expectations, she said.
The most telling component was perceived job security, rising 7.2% from the June quarter to 18%, having languished at a record low of just 1% during the quarter to March.
Overall, the survey index enjoyed its second biggest quarterly gain in confidence since mid-2004, gaining 6.9 index points to propel it to 103 - with 100 being the benchmark where optimists outweigh pessimists.
Less respondents said they were earning more now than a year ago; down from 19% to 15% and a record 14% expect jobs to more plentiful in a year's time, but there was a slight 1.2% increase to 66.5% of employees believing jobs are harder to get.
"However, employees continue to be buoyed by the hope that 2010 will be a whole lot better," Mrs Purdue said.
