Business confidence has held up well in the first clean statistical read of sentiment since the latest lockdown.
The preliminary results of the ANZ's business outlook survey for September, released this week, record some softening from August levels.
But key indicators like firms' views of the outlook for their own activity, and their employment and investment intentions, have eased only one or two percentage points and remain at a high level by the standards of the past five years.
There may, of course, be some further slippage by the time the full crop of September responses is harvested. But so far there is no support here for lobby group leaders' use of words like "disastrous" and "devastating".
It is a case of so far, so not so bad at all. This is encouraging because one of the ways the current lockdown could result in the economic equivalent of "long Covid" would be if businesses became and stayed more cautious and less inclined to invest and hire. That would shorten the economy's stride and lower the threshold at which demand growth becomes inflationary.
Instead they seem, like economic forecasters, to have taken the lesson from last year's experience that demand is likely to swing back swiftly once mass home detention ends.
The ANZ survey is closely watched not only because it is timely but because its respondents, when broken down by sector and region, tend to align well with the national economy's, and are drawn from a range of firm sizes.
Of this month's numbers ANZ chief economist Sharon Zollner said "We examined a split between Auckland and the rest of the country but the differences were very small. We'll keep an eye on that."
Unsurprisingly the survey found a steep drop in firms' reported activity compared with September last year, when activity had climbed with impressive speed out of the crevasse it had fallen into during the first lockdown. Whereas a net 32 per cent of respondents last month reported activity higher than a year ago, a net 4 per cent this time reported it is lower.
But only a net 4 per cent. That indicator bottomed out at a net 63 per cent negative during the level 4 lockdown last year. "Similarly a net 14 per cent of firms are still reporting higher employment than a year ago, whereas in April last year a net 31 per cent reported having fewer staff. It eventually troughed in June at minus 37 per cent," Zollner said.
Westpac's acting chief economist Michael Gordon points to a marked difference in job advertisements compared to last year's lockdown.
"By our estimates the number of new vacancies initially fell by about a third, with a modest pick-up since then in both Auckland and elsewhere. That compares with a drop of as much as three-quarters last year."
The drop in job vacancies this time has been from a very high level, and only back to around where it was two years ago. "With the benefit of experience firms now know that that activity can bounce back quickly when Covid restrictions are lifted and when they are, employers will be back to facing the severe labour shortages that existed before the lockdown," Gordon said.
One negative feature of the pre-Delta economy that remains intact is inflation pressure.
In the ANZ survey a net 83 per cent of firms expect their costs to rise, down only marginally from the net 85 per cent recorded last month. A net 55 per cent of firms expect to raise their prices, down from a net 59 per cent last month. Even so, a net 13 per cent of firms expect profits to fall, compared with a net 6 per cent in August.
Consensus forecasts compiled by the New Zealand Institute of Economic Research, also released this week, have consumer price inflation hitting 3.5 per cent by March next year, before falling back to the 2 per cent mid-point of the Reserve Bank's target band, or slightly above it, over the following three years.
By contrast three months ago the survey of eight private and public sector forecasting shops found the average inflation pick for March next year to be just 2.1 per cent. That is associated with a jump in expectations for wage increases.
The consensus forecast now is that private sector average hourly earnings will grow by an average 3.7 per cent a year over the next three years, up from 3.1 per cent three months ago.
Wage inflation by that measure ran at an annualised rate of 2.8 per cent over the first half of this year.
The upside to that wage growth is that forecasts for private consumption growth in the current and coming March years have been revised higher, to 6.5 and 3.8 per cent respectively. One firm's employees are other firms' customers, after all.
One thing that might weaken that resurgence in consumption is if households react to a second national lockdown by ramping up precautionary saving. That could happen if people come to see Covid-19 as an enduring state of the world, rather than an unwelcome visitor we saw off.
A higher household saving rate would be no bad thing, given how low it tends to be. In the March quarter, of households' collective disposable income of $50 billion, we spent all but $200 million.
But for businesses chasing the consumer's dollar it would not be helpful.
We do not yet have a read on consumer sentiment entirely taken since the second national lockdown. The most recent monthly ANZ-Roy Morgan consumer confidence survey covered a period including only five days after the country went back into level 4 lockdown. Commenting on that survey Zollner described the national mood as broadly one of resigned calm.
"That could change should the data suggest the lockdown is not on track to eliminate Covid-19, but for now it's certainly a marked contrast with the chaos and panic the nation faced when Covid first invaded our shores."
Business have learned that demand bounces back quickly, she said.
"Consumers have learned that their jobs are probably safe, particularly give the exceptionally tight labour market going into this. The Government has learned how to roll out effective (albeit expensive) support measures." Quite.