South Island business appear more bullish about the economy that their North Island counterparts, according to the latest Grant Thornton International Business Report.
The report shows that 16.8% of Mainlanders are very optimistic about the economy in the next 12 months, compared with 8.1% of those in the North Island.
The one cloud over the South Island economy is the acute concern about a shortage of skilled workers.
The optimism figures were supported throughout the survey. South Island firms expected to generate more revenue than North Island companies, generate better selling prices, employ more staff, invest in plant and machinery and pay higher wages, with 80% looking to increase salaries in line with inflation and above, compared with 72.7% for the North Island.
At the generous end, 22.1% of Southland firms expected to increase salaries at levels above inflation, compared with 19.2% in the North.
Grant Thornton partner Simon Carey said optimism in the South Island had been trending ahead of the north for an extended period, as shown by the research which revealed that 45.3% of South Island firms employed extra staff last year, compared with 29.3% in the North Island.
Those employment figures were further reinforced by North Island firms decreasing staff numbers by 25.3% last year, compared with 16.8% in the south.
''Over the last month of so, the gap has narrowed with North Island sentiment being lifted by the bubbling Auckland housing market. South Island levels are tapering, mainly because the high-end growth that businesses were looking for is now occurring, so the expectation levels that drive a business owner's optimism are more muted.''
It was not that business levels were dropping. Once a goal had been achieved, enthusiasm and optimism levels tended to even out, he said.
The Christchurch rebuild was the strongest factor in the optimism and spinoffs from the work it generated were spreading throughout the South Island, Mr Carey said.
The wine industry was making a recovery, as was the Central Otago property market. The impact of the drought was being felt more in the north than the south.
