The preliminary results for the June ANZ Business Outlook Survey show that as the country has moved out of lockdown sentiment and confidence levels have continued to improve.
But confidence is rising from dire levels.
ANZ chief economist Sharon Zollner said all "forward-looking" activity indicators in the survey lifted from their May levels.
"...But they remain extremely weak,” she said.
The preliminary survey results showed that overall business confidence lifted another 9 points to -33%. Expectations of own activity lifted 10 points, but that still left a net 29% of firms expecting lower activity for their firm in the year ahead.
“As New Zealand emerges into the light of Level 1 from a lockdown that succeeded beyond any reasonable hope, disruption has waned, and normality beckons," Zollner said.
"This is fantastic news, but there’s a huge tourism-shaped hole in our economy."
She said the the hardest-hit sectors – accommodation, hospitality, retail – are the biggest employers, and therefore the resulting unemployment "will have unpleasant feedback loops".
"People will feel comfortable going into a shop or restaurant – that’s a huge win – but whether they’ll feel comfortable spending money is another question again."
ASB senior economist Mark Smith, commenting on the survey results noted that the climb in business confidence was "from a deep hole".
"Levels for the key metrics in the survey remain weak, with employment intentions and expected profitability dire," he said.
"Despite all this, NZ is now at Alert Level 1 much sooner than most analysts had expected, including ourselves. A long road lies ahead but recent developments provide some hope that the Covid-19 hit to the NZ economy will not be as bad as previously feared.
"We have pencilled in a 6% contraction for GDP over 2020 but acknowledge the risks to the outlook are becoming more upwardly skewed."
Further details from the ANZ Business Outlook survey included:
·A net 22% of firms expect to reduce investment (up 10); a net 51% expect lower profits (up 5), and a net 18% expect lower capacity utilisation (up 8).
·A net 37% of firms expect to cut jobs. This is an improvement of 5 points, but it largely reflects that many firms have already acted.
·In line with news stories of redundancies, an increasing proportion of firms report having fewer staff than in the same month a year ago.
·Nearly half (49%) report having fewer staff, but 9% report having more, the net result is -39% (down 3).
·Deflationary pressures remain evident. Expected costs are increasing only slowly, pricing intentions are only just back in the black, and one-year-ahead inflation expectations are at just 1.35%, barely off their record lows.