Trans-Tasman bubble touted for business confidence boost

Business confidence has perked up, likely as a result of the opening of the trans-Tasman travel bubble.

The final reading of the ANZ Bank's monthly survey for April showed pessimism evident in a preliminary survey eased, with a net 2 percent believing the broad economic outlook would get worse over the coming year from 8 percent at the start of the month.

The more closely followed 'own-activity' measure improved to its best level in more than three years to a net 22 percent expecting better times for their own businesses.

"The early results may have been affected by the newly released housing policy, while the later sample may have been boosted by the trans-Tasman bubble news," ANZ's chief economist Sharon Zollner said.

"Cost pressures are intense, and subdued profitability expectations suggest firms are not optimistic about their ability to recoup all of it."

The survey showed firms' investment and employment intentions rose, while expectations of profits turned marginally positive.

"Overall, the robustness of the data is starting to challenge our view that the economy will go largely sideways this year. However, resource constraints mean willingness to grow, and the ability to actually do so, are not the same thing," Zollner said.

However, inflation pressures remained to the fore with three-quarters of respondents expecting higher costs, with the number planning to raise prices hitting a record high at 56 percent.

Zollner said there were still challenges from such factors as shipping disruptions, and there could be further price pressures from rising wages.

Inflation expectations were sitting steady at just under 2 percent, which is the Reserve Bank's (RBNZ) target. It has previously said it wants to see inflation firmly established around the target point as one of the conditions for easing back on easy money policies.

And the once standout construction sector was showing signs of strain with residential and commercial intentions falling markedly, which Zollner said was a concern.