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ANZ Business Outlook for the full month of July shows slightly weaker readings than earlier in the month - but still better than for June

ANZ Business Outlook for the full month of July shows slightly weaker readings than earlier in the month - but still better than for June

The post-lockdown bounce in business confidence appears to be running out of steam, according to the full-month July ANZ Business Outlook Survey.

The preliminary readings for the survey as of early this month showed a surprisingly strong bounce from the lockdown - but there was always a suspicion that this bounce was in part a reflection of pent up demand and that it wasn't likely sustainable.

And in releasing the final survey results for the month on Thursday, ANZ economists said it showed "some slippage compared to the preliminary July read".

Headline business confidence was at -32%, slightly lower than the preliminary read of -30% but better than June’s -34%.

A net 9% of firms expect weaker activity for their own business, well up on June’s -26%, but the improvement has stalled since the preliminary July read of -7%.

Among other key findings, the retail sector has driven much of the rebound since June, while the export-focused agriculture sector is now the most negative regarding expected activity, export intentions, profitability, credit availability, investment intentions and employment intentions.

Some 31% of firms say they intend to lay off staff, and 24% say they have fewer staff than a year ago (some of these will be the same firms). These numbers have, however, improved significantly from their lows.  

“The vigorous bounce out of lockdown appears to be topping out, with most activity indicators in the ANZ Business Outlook survey slipping slightly from their early-July preliminary reads, albeit still well up on June,” ANZ Chief Economist, Sharon Zollner said.

“The New Zealand economy is in a relative sweet spot. Of course there’s the massively important fact that we don’t have community transmission of Covid-19 and therefore have fewer restrictions on our lives than almost anywhere else in the world. But also, we’re in a sweet spot in terms of the evolution of activity.

“Bounces are fun, but this one has probably nearly run its course.”

“The rebound out of lockdown has been enthusiastic for retail, domestic tourism, and the housing market.

“And the economic pain arising from the closed border and sharply weaker global growth is yet to be fully felt – partly because an economy is just a slow ship to turn, but partly because of the enormous fiscal stimulus such as the wage subsidy scheme that is masking the real income hit that the economy is experiencing.

“Unfortunately, that blow is coming; it’s inevitable. That the border will remain closed for the rest of the year is one of the few certainties in our economic forecasts at the moment. And that fact, in and of itself, means a big hole in economic activity, centred on tourism and the foreign education sector.

“The blow won’t be felt evenly, but it will be felt. Looking at the full-July Business Outlook data versus the more-optimistic take at the beginning of the month, the post-lockdown bounce may be running out of puff. Gravity is calling.

“All up, this might be as good as it gets for a while. Still, looking at what’s happening abroad, we can count our lucky stars.”

Zollner cited some of the following key themes coming out of the latest survey: 

  • On the activity side, a particular weak spot is agriculture export intentions, while more broadly, the weaker sectors are manufacturing, agriculture and services. Retail is now one of the more optimistic sectors, as is construction.
  • Looking at how the data has changed compared to June, increasing pressures on the agriculture sector are again evident. Business confidence in the manufacturing sector also fell unusually sharply, which may be related to renewed Covid-19 troubles in the key market of Australia.
  • Cost pressures and pricing intentions are continuing to lift off their lows, though to a lesser extent in the services sector.
  • The labour market is looking a little better – employment intentions in the services sector bounced back considerably, though levels remain weak, with hospitality and tourism under extreme pressure. Retail sector employment intentions have also bounced back, and to stronger levels, presumably as a result of the sharp bounce in spending seen post-lockdown. However, on net the sector is still intending to reduce employment.

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The body of the report talks about the damage to retail and tourism sectors, but by far and away the worst sector in the business confidence table is agriculture. What's up with that?


Maybe the ag sector confidence is low due to the constant onslaught from activists, politicians, local councils, media etc

Quite possibly. Just surprised that wasn't the focus of the report, given the importance of the Ag sector to our economy.

That's one of the main reasons my parents are trying to sell their farm. Theyre already in a priority catchment area and have capped nitrate leaching which gradually gets smaller over the years. Either they sell or they're going to subdivide it into 10ha blocks to sell as a last resort.

Oh no they have forgotten about the Ag sector again now that the economy isnt shut down... *addition of burdensome and expensive regulations intensifies*


Farmers are looking at the upcoming election and seeing that it looks like we will most likely end up with a solely Labour, or Labour/Green government without even Winston Peters involved to give farmers any level of protection from green and socialist policy.
The farm I work for is also on the market, and quite frankly I won’t be sad when it sells and I am planning to change industries.

Good insight thanks mate - how long have you been farming for


About 14 years now. Started in dairy and then have been dry stock the last 8 years.
There has been a huge change in the industry in the past 10 years especially, and now I feel like I spend most of my time and energy just learning and complying with ever increasing regulation, which in turn prescribes the way I have to farm and I don’t enjoy it anymore.
We are a low intensity system with no cropping, bought in feed or synthetic nitrogen used but still face pretty significant challenges from the new Waikato Regional Council Healthy Rivers Plan, so I can only imagine how much harder it is getting for more intensive farms.

“Socialist policy” - seen this a lot recently but no one can explain what they mean.

Can you articulate the means of production that the state has acquired that has affected your private property?

Or are you referring to the wage subsidies paid to workers during COVID, which maybe makes them employees of the state?

Or are you referring to water quality standards that affect the amount of natural capital you can no longer burn to make your farm turn a profit?

Just more right wing nonsense. Even the Greens are far from Socialist.
Maybe we can strike a deal. Right wingers can call Labour / Greens socialist if the left can call the Nats fascist?

How about effectively seizing 5,000ha of private land on the West Coast and making the land owners pay for it?

Of course I refer to socialism in more of a colloquial manner rather than true Marxism, but I do feel concerned about plenty of what our government does, including increased welfare, the high likelihood of raising taxes and a very obvious suppression of free speech and sharing of information.

They were probably not making much before anyway with very low margins compared to other sectors and they are probably the most affected due to that.

Is it going to be a V shape recovery?
Mind you it could be a U or a W or L shape..



More likely to be 战 shaped

OK, lemme see - looks like paste into good old google translate and..."War"
So that's why it looks like a warhammer wielding stick man on a rampage.
You deserved more thumbs up than me.

Well worth noting: "Unfortunately, that blow is coming; it’s inevitable . . . "
Despite both equities and housing markets standing-up fairly well so far, it would be rash to dismiss this comment.
Although the shock may not be apocalyptic, one should be prudent over the next 12 months. For many who are potentially at risk, I would be hesitant about rushing in and building that much talked about pergola or that extended expensive trip down south.
It is not surprising that in terms of the current uncertainty that there is demand for gold as a safe haven.

There is so much conflicting information at the moment. House builds on the rise, then business confidence going back down. Best just to hold stock and get your own house in order as I think the show has only just begun.

Amazing to see the res. property market pumped up so aggresively by almost all parties. Are we hatching our own disaster? will find out not too long from now.

If a central banker sells down their portfolio would that be insider trading?

It would be a "market signal"


Of course it always was going to run out of steam , we were all patting ourselves on the back when we "eliminated" covid and went on a spending spree in restaurants and over the school holidays .

The world economy is a mess , and HUGE mess , its going to take ages before the full effects are felt as economies shrink and fall into recession , and we are not going to get off Scot - free.

The worst is yet to come

If you thought the governments money printers were running fast now, you ain’t seen nothing yet!


The worst is indeed yet to come
Most people erroneously think NZ has dodged a bullet here, but the truth is that the bullet is still coming at full speed and we are just running away at the same speed, it will only need a small stumble and that bullet will reach its target.
Far from NZ being a safe haven from Covid19 we are now in the position of having zero immunity, no vaccine, and active cases (bullets) arriving every day while in the mean time we have already suffered the economic shock that will be with us for several years yet.
The problem is, not yet having had the first wave of infections we will be right back at the start of the cycle all over again when it happens, and we have already spent all the money, lost the jobs, closed the businesses, there is no more gas in the tank. When this finally happens we are totally screwed.

Yep, I just hope those that did mortgage holidays, interest free.. etc did'nt fire there shots too soon. I think they may have.

Where can I get in on these interest free mortgages?

Far from NZ being a safe haven from Covid19 we are now in the position of having zero immunity

Nowhere has any practical immunity. The only places that might begin to have some semblance that is of any benefit, are NYC, parts of Italy and Stockholm.

And, potentially, Vietnam, as SARS-CoV-2 or its immediate evolutionary ancestors may have actually originated in Vietnam before being spread to China.

The problem is, not yet having had the first wave of infections we will be right back at the start of the cycle all over again when it happens, and we have already spent all the money, lost the jobs, closed the businesses, there is no more gas in the tank. When this finally happens we are totally screwed.

You've completely missed the point of the lockdowns. It wasn't to "delay the ineveitable" as you seem to think. It was to give society time to come up with treatments and other interventions that reduce the severity and transmissability of the disease. Which is exactly what has happened.

While we haven't had any sort of roll-out of masks in NZ, supermarkets everywhere still have perspex shields up at the checkouts, and everyone is much more vigilant about respiratory illness. If the virus were to arrive in NZ now it would spread more slowly in these conditions than it would have back in January.

That's also ignoring the improvements in medical care and understanding of the disease, including several specific drug treatments that have been shown to be effective in reducing mortality. Also rest homes and other vulnerable populations will have had time to develop protocols to help reduce spread amongst their populations too.

While the virus would still spread rapidly if given a chance as we can see from Victoria, the total impact were it to spread now would still be reduced than what it would otherwise have been.

As time goes on, the treatments are only going to get better, and typically viruses evolve to become less lethal, although SARS-CoV-2 seems to be quite slow to evolve so far.

It is also looking likely that there will be at least 1 vaccine being distributed on a large scale by the end of the year, although NZ is unlikely to see much in the way of volume.

You've completely missed the point of the lockdowns. It wasn't to "delay the ineveitable"

I'm sorry, that was absolutely and exactly the point of the lockdown, to delay the incoming and spread of the Virus to allow some level of preparedness for the onslaught.

There is no cure, there is no vaccine, one superspreader escape artist from quarantine has the potential to cast all of NZ in a sudden surge of cases exactly as is happening in Australia. Your rose tinted view is absolutely pathetic.

RCD you're displaying hindsight bias. What did we know about the virus back in March? What did we know about potential cures and vaccines. What did we have in terms of ICU and ventilator capacity back then, in the middle of a worldwide shortage? You can't see how much better prepared NZ is now for the virus than it was in March?

Agreed Lanthanide. Unfortunately people have become extremely tribal and political about the virus.

Didn’t the business community signal ‘low confidence’ for months/years after the 2017 election to signal their displeasure at a Labour Govt in charge?
This is pre-election protesting perhaps.

Boom Time Ahead !

Yep, if you’re delaying buying a house due to gloom pundits you may be as disappointed as the 2009 gloomsters - who got left behind.


Hi, I'm here for the cheerleader audition.

I worked from home from end of March to mid June. Saved heaps in petrol. The five weeks of Level 4 was grocery food only. Level 3 we got some takeaways and helped boost local eateries. Level 2 we started dining out. Level 1 school holidays, felt more comfortable with the covid response so we splashed a bit for the good of the economy. But that’s all pent up demand and spending the extra cash we would have otherwise spent if not for the lockdown.

Now I’ve been back at work for a month so re-learning how to go back to my usual weekly spending levels, seeing as I need to start filling up petrol again, and buy more groceries with kids back in school. The mini spending spree and holidaying in our own neighbourhood has now slowed down as we settle back to normal.

I would expect a lot of people would be doing the same - dial down on discretionary spending once life is settling back to normal. I really think July is an overshoot and that August / September would be back down to June levels. Ocotber would be even lower as the wage subsidies finish, and the real round of redundancies begin.

subsidies are temporary. what will eventually need to happen and will happen is huge debts will have to be accounted for, whether its pre covid or post covid debts, private or public. i.e the balancing will happen. if you bought a lot of assets with debt, you never really owned them so should relax when you have return these assets to whoever lent you to buy these assests, Its a normal balancing that has to happen. Once the balancing (bringing the debt level to where it should have been in the first place) happens, start again but more sensibly.