Expectations of increased economic activity because of rebuilding Christchurch and holding the Rugby World Cup have pushed business confidence to a record high, according to the latest BNZ survey.
BNZ chief economist Tony Alexander said the bank's monthly survey found that a "very strong" net 57% of respondents expected the economy would be better in a year's time. That was well up from May's net 42% expecting better things for the economy.
"In fact, in the five and a-half years during which we have been running the survey, sentiment has never before been this high."
However, Southern businesses were still struggling, while hopeful of better times ahead, Otago Chamber of Commerce president Peter McIntyre said yesterday.
The chamber was meeting senior regional business leaders every two or three months to talk about the state of the economy and how they were finding business conditions, he said.
"It is still tight out there. In the last two or three years, businesses have cut out all excess and are running lean and mean. But a lot of businesses are still struggling with compliance costs and a lot of other burdens being laid on them."
Changes to KiwiSaver had been added to business compliance costs along with a push for higher wages for staff, Mr McIntyre said.
Other areas hurting in the region included a slowdown in residential and commercial construction, retailers finding it particularly tough and exporters being hurt by the high value of the New Zealand dollar.
Fortunately, a strong rural economy was helping towns like Gore, Balclutha and Alexandra, he said.
Looking ahead, the Rugby World Cup would give the region a boost, with the English team based in Dunedin for three weeks, although the cup would not solve all of Otago's business ills.
It was likely that Dunedin tradespeople would be in demand for the rebuilding of Christchurch, he said.
"As far as business relocation from Christchurch is concerned, at this stage it is minimal but we have the opportunity in Dunedin to provide a link to help those businesses wanting to shift to stay in the South Island, We have excess capacity and a wide range of services." Mr Alexander said that one theme coming through in several of the comments was expectations of stronger activity related to the rebuilding of Christchurch.
"Another is some hope regarding the boost to come from the Rugby World Cup, along with positive sentiment regarding agriculture and agricultural sector servicing.
There was also a noticeable improvement in comments about current conditions submitted by those in the accounting profession. In residential real estate, comments are generally positive with a smattering of negative comment.
Non-residential real estate had taken on a "rather positive tone", Mr Alexander said.
The survey suggested it remained reasonable for business people in New Zealand to plan for better times ahead, although soaring optimism was not a sufficient condition for strong growth.
"After all, the strong lift in early September 2008 came right before the global financial crisis and last year's firm confidence up until June did not correlate with the fact that during that quarter, the economy almost shrank," he said.
