Businesses expect economy to get worse - ANZ survey

Auckland firms appear to be holding up "surprisingly well" despite the lockdown restrictions. Photo / Dean Purcell

By RNZ

Businesses remain upbeat about their outlook despite lockdown restrictions and surging inflation.

ANZ Bank's monthly survey of sentiment shows companies are more confident about their own outlook but more pessimistic about the broader economy.

The measure of business confidence about their own outlook increased to a net 22 per cent from 18 per cent in September, while headline sentiment grew more pessimistic to a net 13.4 per cent expecting the broader economy to get worse from 7.2 per cent pessimism last month.

ANZ chief economist Sharon Zollner said given the uncertainty caused by the Covid-19 outbreak the medium-term indicators were robust, but rising costs were being felt.

"Unrelenting cost pressures highlight that it's tough going. Cost and inflation pressures intensified further in October."

A net 87 per cent of firms reported higher costs, and nearly two-thirds of respondents were planning to raise prices.

Firms expected to increase exports and investment but were slightly less positive about their profit outlooks and hiring staff.

"Despite living week to week to some extent, firms appear to be getting on with it as best they can," Zollner said.

She said Auckland firms appeared to be holding up "surprisingly well", and forward-looking expectations and intentions remained positive.

"The resilience of Auckland businesses is impressive but this survey won't capture cumulative balance sheet damage."